Part 1 - AHK Greater China

Transcription

C TICKER
BEIJING | SHANGHAI | SOUTH & SOUTHWEST CHINA
February - March
1 | 2011
Free Bi-Monthly Newsletter of the
GERMAN CHAMBER OF COMMERCE IN CHINA
On The Move
Human Resources in Transition
The Art of Enlightenment
Biggest Museum in the
World Opens its Doors
Hohhot
Where the Grass Gets
Greener
Southeast Asia Tour
Travelling through Three
Countries in One Week
2010/2011 December - January
1
2
December - January 2010/2011
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Publisher
German Chamber of Commerce in China
Offices and Teams in Mainland China:
GC Ticker Team
Managing Editor (Shanghai)
Editor (Guangzhou)
Design (Shanghai)
Editorial Assistant (Shanghai)
Ms. Selma Koehn
Ms. Heidrun Buss
Ms. Ye Li
Ms. Natalie Gagnon
GCC l Beijing
0811 Landmark Tower 2, 8 Dongsanhuan (N) Rd.
Chaoyang, Beijing 100004
' 010 6539-6688 6 010 6539-6689
* [email protected]
Executive Chamber Manager
Dr. Juliane Bielinski
010 6539 6660
[email protected]
Chamber Affairs Manager
Ms. Wang Miao 010 6539-6661
[email protected]
Regional Manager North China
Mr. Christoph Fazakas
010 6539-6662
[email protected]
Head of Communications
Mr. Daniel Abel
010 6539-6670
[email protected]
GCC l Shanghai
25F China Fortune Tower, 1568 Century Ave.
Pudong, Shanghai 200122
' 021 5081-2266 6 021 5081-2009
* [email protected]
Ms. Michaela Beck
Ext. 1630 [email protected]
Regional Manager Shanghai
Mr. Jan Höpper
Ext. 1656
[email protected]
Regional Manager Zhejiang & Jiangsu Provinces
Mr. Sebastian Wegener
Ext. 1830
[email protected]
Communications Manager
Ms. Selma Koehn
Ext. 1637
[email protected]
Social Events & Marketing Manager
Mr. Sebastian Zettelmeier
Ext. 1605
[email protected]
Project Manager
Ms. Li Yandi
Ext. 1609
[email protected]
Chamber Team Assistant
Ms. Liu Li
Ext. 1650
[email protected]
GCC l South & Southwest China
2915 Metro Plaza, Tianhe (N) Rd.
Guangzhou 510620
' 020 8755-2353 6 020 8755-1889
* [email protected]
Ms. Heidrun Buss
020 8755-8203
[email protected]
Regional Manager
Mr. Max Zenglein
0755 8635-0487
[email protected]
Chamber Affairs Manager
Ms. Esther Hu
020 8755-2353 ext. 217
[email protected]
Chengdu Liaison Manager
Ms. Astrid Schröter
1340 2857 262
[email protected]
Cover images: dreamstime.com
GC Ticker is free of charge. For subscriptions or extra copies please e-mail your
nearest Chamber office. Previous issues of the magazine can be found on our
website www.china.ahk.de/publications.
©2010. German Chamber of Commerce in China. No part of this publication may
be reproduced without the publisher’s prior permission. While every effort has
been made to ensure accuracy, the publisher is not responsible for any errors.
Views expressed are not necessarily those of GIC/GCC
4
Jutta Ludwig
Executive Director German Chamber Beijing
Delegation of German Industry & Commerce Beijing
Delegate & Chief Representative
Challenge HR
Scarcity of experienced personal and new social insurance legislation – Chinas HR sector is on the
move.
The shortage of experienced and well educated Chinese personnel has been an ongoing challenge
for German firms in China for three decades, and they have successfully dealt with it by using their
own training and education measures. The latest economic and legal developments in China are
now confronting our companies with new challenges.
Although the strike wave in Chinese companies has affected just a few German firms, the work
stoppages have led to almost a 30% rise in wages in the lower market segment.
Another challenge is the mismatch between China’s labour force and the needs of employers.
On one hand, the number of migrant workers, who have been a key factor in expanding
Chinese manufacturing industry over the last decade, is now shrinking. On the other hand, the
unemployment rate among college educated Chinese youth is rising.
Adding to all of this, companies face the challenge of the new social insurance legislation becoming
law in mid-2011. For the first time in China, mandatory and full social insurance coverage will most
likely be imposed on migrant workers and foreigners.
As China’s economy continues to boom, professional hiring in the country is accelerating, putting
greater pressure on the HR community.
The German Chamber of Commerce in Beijing is also focused on finding the right candidate to fill
a key position. I will be leaving the Chamber in March of 2011 to take a new position in Hamburg.
However, I am confident that DIHK in Berlin will be able to very quickly nominate a new Executive
Director for Beijing.
After many years with the German Chamber of Commerce, I would like to express my deep and
heartfelt appreciation to all of the members and friends of the German Chamber of Commerce in
China. In the past seven years, you have given me your trust and have made it possible for me to
successfully work for the benefit of our economy and to strengthen the German-Chinese bilateral
economic relationship. I would be grateful if the next Director in Beijing experiences such a positive
work environment. I wish you all the very best for the New Year of the Rabbit and for your ongoing
successful business in China.
Jutta Ludwig
GCC All-China Board Members
Mr. Ulrich Walker
Mr. Titus Freiherr von dem Bongart
Mr. Holger Sindemann
Chairman GCC l Beijing
Chairman & CEO of Daimler
Northeast Asia Ltd.
Chairman GCC l Shanghai
Partner and Head of GBC China
Ernst & Young (China) Advisory Ltd.
Chairman GCC l South & Southwest China
President & CEO
MTU Maintenance Zhuhai Co. Ltd.
Ms. Jutta Ludwig
Mr. Jan Noether
Ms. Alexandra Voss
Executive Director GCC l Beijing
Managing Director GCC l Shanghai
Executive Director GCC l South
& Southwest China
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CONTENTS
40
Business Focus
8
News from Berlin and Brussels
9
Member News
Beijing
Shanghai
South & Southwest China
9
10
22
24
24
26
28
30
32
Cover Story: Human Resources
Recruiting and Retaining Generation Y
Employees
Stirred Assurance
Salary & Retention
From East to West and Back: The Changing
Face of Migrant Workers in China
32
34
36
Regional Spotlight:
North China: Hohhot
East China: Kunshan
Southwest China: Chengdu
35
37
Meet the Member:
Frank Imkamp: Lapp Kabel
Raymond Chan: Axa
6
32
Community
64
65
Training & Education
Trilingual Kindergarten Kids
66
New Books
68
Art & Culture
The Art of Enlightenment
70
Sports
Formula One – Fast to the Finish Line,
Slow Into Chinese Hearts
Interview with Julian Lee, Director of SIC
Kartworld
70
53
Chamber News
38
Chamber Notices
40
Beijing
China officials attended the launch of the
EU SME Centre, and chamber members
reviewed law updates
44
Shanghai
Workshops focused on social insurance
laws, taxes, salaries and turnover rates;
Board Directors and Chamber members
united at a roundtable
58
South & Southwest China
Chamber members in Chengdu
discussed salary structures and ventured
underground at a subway construction site
71
72
Giving Back
A Helping Hand for Orphans in
Qingyuan
74
Food
The Bill Steadily Rises
75
Environment
Urban Farming: Citizens Take It to the
Rooftops
76
Travel
Leap Through Southeast Asia
78
79
City Tour
The Best Sights of Yangzhou
From Ancient City to Modern Eco-City
80
This & That
80
Church Calendar
82
Chamber Events Calendar
78
68
A New Year,
A New Platform
In April 2011, BusinessForum China will
make the transition from print to web.
Visit us in April to find
 An archive of 500+ China
business articles
 Access to hundreds of China
business professionals
 Daily business and legal news
 Weekly in-depth reports
 Exhibition and event calendars
and much more!
We Are Going Online
BusinessForum-China.com
7
BUSINESS FOCUS
NEWS FROM BERLIN AND BRUSSELS
NEWS FROM
BERLIN AND BRUSSELS
2011 Will Be A Good Year
Interview with GCIC President, Mr. Hans Heinrich Driftmann
Mr. Driftmann, how will the New Year be?
The economic recovery will continue, as
companies invest more in Germany again.
This has spurred the labour market and
subsequently, consumption. I therefore
assume that 2011, with a still very
respectable growth of 2.4%, will be a good
year.
What are the biggest risks to economic
development in 2011?
The biggest worry currently is the Eurodebt crisis – we therefore need urgent and
effective arrangements for orderly state
bankruptcies. Furthermore, the energy
and commodity prices are developing into
a serious economic risk. Another upturn
risk is also the increase of skills shortages.
seven out of ten companies already face
difficulties finding qualified employees.
In what areas is there urgent need for
action?
In addition to fiscal consolidation, we
finally need to enter into a tax reform
with simplifications and reductions in
Eco-Tax Reductions Will Remain
Berlin. The federal government has
not cut budgets as much as it originally
planned. The eco-tax-cap will remain
largely intact and the base rate increase
will be lower. However, the reduced rates
will increase. DIHK and Chambers had
previously advocated to strengthen the
international competitiveness of companies
despite the need for saving measures.
Politicians answered the call. For companies
with high energy costs, the result is
acceptable.
Contact: [email protected]
8
February - March 2011
particular in medium-sized segments as
well as in corporate taxation. As part of
a rational strategy, the economy would
be prepared to support a reduction in
subsidies. In addition, policies should
accompany the security of the supply of
raw materials – for example through fair
export and import rules, which include the
supply of raw materials. We also need to
secure skilled workers, a coherent overall
concept, which includes in addition to the
better use of the local potential, the easier
migration of highly skilled professionals.
Raw Material At Its Highest
Value Today
BERLIN/BRUSSELS. Raw material supply
is becoming a greater economic risk. Nine
out of ten industrial companies suffer
from rising commodity prices. More than
half of all industrial companies worry if
they can even get a hold of their required
raw materials. Another difficulty for
German companies is that more and
m o re r a w m a t e r i a l s u p p l i e r s f a v o u r
short term contracts – at the expense
of planning certainty. In view of this
dramatic development, the DIHK asked
the federal government to increase support
to companies in research and technology.
In a letter to the Federal Minister of
Economics, Mr. Rainer Brüderle, the DIHK
warns that on the German and European
level, everything should be done to allow
free access to raw materials as an integral
part of international trade agreements.
The companies themselves have already
accepted the challenge. They are controlling
with resource efficiency and replacement of
materials, or they find new suppliers and
sources of raw materials.
Eleven Companies Honoured
for Energy-Saving
More Venture Business!
Berlin. "The developing countries
of today are the emerging markets of
tomorrow. Here, the long-term markets
for the German foreign industry develop
– especially in industries of the future;
e n v i r o n m e n t a l t e c h n o l o g y, w a t e r /
sanitation, and education and training," said
DIHK chief executive Mr. Martin Wansleben
at the publication of a development policy
position paper. In the paper, the DIHK
requests priority for the development of the
private sector as well as better coordination
of activities in developing countries. The
cooperation between the Chambers of
Commerce abroad and the organisations
of the BMZ should also be expanded.
The BMZ was right to start gearing the
Foreign Trade and Economic Cooperation.
"However, the German economy should
be more closely involved in the selection
of priority countries and sectors," said Mr.
Wansleben.
Berlin. A foundry from BadenWürttemberg saved 2,100t of CO 2 in just
two years; a chemical company lowered its
energy consumption within four years to
14%. With modern technology and creativity,
businesses can reduce their energy costs by
up to 25%. Eleven companies demonstrated
this and were awarded by the Partnership
for Climate Protection, Energy Efficiency
and Innovation. The DIHK and federal
government want to set an example with
their accomplishments. "In rising commodity
and energy prices, companies are currently
seeing the biggest economic risks. All the
more important it is to help companies save
energy," said DIHK chief executive, Mr.
Martin Wansleben. For more information
about the winning companies, visit www.
klimaschutz-unternehmen.de.
MEMBER NEWS BEIJING
MEMBER NEWS
BEIJING
Haifuman Introduces New
Restaurant
Haifuman introduces a new beautiful
park restaurant in Haidian as a venue
for family parties, theme events,
business meetings, individual dinners,
corporate events and outside catering
with home-brewed Villa Castanea Beer.
The brew master in Villa Castanea,
Mr. Andreas Kurzemann sends his
greetings.
www.china.ahk.de
Evonik Achieves EUR 1bn
Sales Target in Greater
China Region
Evonik Industries AG recently announced
that it had already achieved its 2010 sales
target of EUR 1bn by the end of October
2010 in the Greater China region. Boosted
by the strong market demands, sales of
the first ten months in mainland China,
Hong Kong and Taiwan reached EUR
1.03bn, almost a 50% increase from last
year.
It is estimated that the Chinese chemical
market will contribute to about 20% of the
global chemicals market mid-term. Evonik
is committed to join this high growth
market and aims to reach EUR 2bn sales in
the Greater China region by 2015.
In order to ensure continued longterm growth, Evonik is stepping up its
investment in local production facilities,
R&D and human resources in the Greater
China region. One recent example is the
decision to set up the Advanced Project
House for Electronics and Lightings in
Taiwan in 2011. This is the ninth project
house of Evonik and the first project
house to be established outside Germany.
Beiten Burkhardt Welcomes New Partner
Dr. iur. Jenna Wang-Metzner has been elected partner of Beiten
Burkhardt Rechtsanwaltsgesellschaft mbH. Dr. Wang-Metzner has
had a high-calibre career in China and abroad with international
banks. She was also an in-house legal counsel for a multinational
company before joining Beiten Burkhardt.
Dr. Wang Metzner is now a resident partner of the law firm’s Beijing
representative office. She focuses on advising Chinese companies on
their investments in Europe in the areas of M&A and stock listings at
Deutsche Börse Frankfurt. Furthermore, she helps foreign enterprises
with their investment projects in China.
Through her previous
positions in the banking
sector in Europe and
C h i n a , D r. Wa n g Metzner is particularly
experienced in
i n t e rn at i on a l ca p i t a l
markets. She serves
as primary contact for
Chinese clients at the
firm’s Beijing office,
and develops business
in the field of Chinese
investment in Europe.
2011 February - March
9
BUSINESS FOCUS
MEMBER NEWS SHANGHAI
MEMBER NEWS
SHANGHAI
ACO Launches Local
Production in Shanghai
After four years of preparing the drainage
market in China, ACO has made steady
progress in pre-cast line drainage systems,
especially in terms of application in office
buildings, hotels, railway stations, logistic
centres, etc. Local production in Shanghai
began in October 2010.
D u r i n g t h e 1 4 th O c t o b e r o p e n i n g
ceremony, Mr. Ahlmann, chairman of
ACO Group, Mr. Wang Xiaonan, GM
of ACO China, and Mr. Carstensen,
chancellor of Schleswig-Holstein, dotted
the eyes of a lion in a ceremony to
officially mark the start of production of
polymer concrete channels. In the first
week, ACO already supplied channels
to the HK Cathy Pacific logistic centre.
This local production strengthens ACO’s
market leadership by providing faster
delivery, lower costs, and better services.
German Know-How Comes to China
Doing business in China is demanding for
German companies and it often requires
managers to deal with international sales
and marketing, planning and budgeting,
leadership skills or management
development. There is a high need for firstclass training for leaders and managers of
international companies in China. That’s
why Asia-Pacific Management Consulting
GmbH (APMC) will be organising the third
German Expert Forum in China.
will act as trainers in a series of seminars.
For the first time, APMC will offer the
seminar series not only in Shanghai but also
in Suzhou Industrial Park (SIP).
APMC launched the first German Expert
Forum in 2009. The great response to
this event convinced Dr. Kuang-Hua Lin,
president of APMC, of the need for personal
coaching and training of a high international
standard in China.
From 11th January to 31st March 2011, eight
German experts with various specialisations
New Osteopath and Psychologist at Body & Soul
Body & Soul - Medical Clinics welcomes
two new colleagues to its team of doctors
and therapists.
Mr. Marshall Gabin D.O. is a registered
Osteopath and has trained with many of
the leaders in manual therapy for several
years before attending osteopathic school in
Auckland, New Zealand. Having practiced
over 20 years, Marshall is dedicated to
enhancing the quality of his clients’ lives
through the reduction of pain and stress via
the use of structural manual therapies.
Ms. Trine Pless-Rasmussen has been
working as a psychologist and counselling
10
supervisor since moving
to Shanghai in 2008.
She studied psychology
at the Universities of
Glasgow and Zürich,
and received her BA
d e g re e i n P s y c h o l o g y
a n d h e r M S d e g re e i n
General Psychology
from universities in the
U.S. Trine works with
individuals, couples,
and teenagers and
mainly focuses on the
psychodynamic approach.
MGCC Sponsors Award for Best Performing
Students
On 30th October 2010, the Malaysian German Chamber of Commerce
and Industry presented 12 awards to the best performing students
in the industrial electronics and production technology categories at
the 16th Convocation Ceremony of the German-Malaysian Institute.
Twenty members of MGCC sponsored the award, which was given
in cash to the best performing students.
MGCC is a founding member of GMI, which was launched in
December 1991 under the joint venture of GTZ, a German agency for
technical cooperation. Combining German skills and know-how, the
institute aims to produce highly skilled manpower to support the
production technology and industrial electronics field in Malaysia.
The Chamber recognises education as a strategic field. In
dynamically fulfilling this objective, the Chamber has set the course
for MGCC’s own dual training project in business administration.
MGCC’s Executive Director, Mr. Alexander Stedtfeld with the best performing
students.
BMP Shanghai Welcomes New Director
in Northern China.
BMP Construction Consulting
(Shanghai) Co. Ltd. welcomed
Mr. Ingo Sibbe as new Regional
Director Northern China
in October 2010. Mr. Sibbe,
holding a degree in civil
engineering, started his first
China assignment in 1997 on
a l a rg e - s i z e d d a m p ro j e c t .
Following his interest in
industrial projects, he completed
a multitude of industrial, R&D
and HQ construction projects for
multinational clients – the same
field of activities covered by
BMP. Mr. Sibbe will be in charge
of further developing activities
BMP Construction Consulting (Shanghai) Co. Ltd. is a SinoGerman engineering and project management firm, with major
activities in the automotive and pharmaceutical field. More than 100
highly qualified engineers deliver state-of-the-art projects through
all phases of design and construction for mainly European and
American Clients.
11
BUSINESS FOCUS
ContiTech Buys Chinese Conveyor Belt
Manufacturer
The ContiTech Conveyor Belt Group, Northeim Germany, has
acquired the conveyor belt operations of Tianjin Xinbinhai Conveyor
Belt Co. Ltd. Tianjin. The relevant agreements were signed in Tianjin
in October 2010. With a workforce of around 200, the company
mainly produces conveyor belts for metal and cement processing
and other sectors of industry at its plant in Tianjin. This acquisition
gives ContiTech a new market in an up-and-coming region, and
strengthens ContiTech’s position in China. ContiTech already
manufactures conveyor belts for industrial applications at a number
of locations worldwide. Now ContiTech can supply the Chinese
market with products made in the country.
New Project Coordinator at Fiducia
Management Consultants
Mr. Hannes Basten joined
Fiducia’s Corporate Services
Team in Shanghai as project
coordinator in January
2011. In this role, he will be
advising clients about their
entry plans to the Chinese
market and supporting them
in their efforts to establish a
legal entity in China.
Wi t h t h i s a p p o i n t m e n t ,
Fiducia Management
Consultants strengthens its
support to clients in company
incorporation. Corporate
Services is a core part of
Fiducia’s service portfolio,
which also comprises of China strategy consulting, outsourced
accounting, trade support, executive search services and a
customised ERP-Solution.
Mr. Basten has been in China since September 2009 to pursue his
MBA in Shanghai. Prior to his postgraduate studies, he worked
with Siemens Germany in different functions, most recently in
the Performance Development department of a Siemens Financial
Services subsidiary in Munich. He is a native German speaker,
fluent in English and also conversant in Mandarin Chinese.
BREEZE Project (China) Ltd. Opens Office in
Shanghai
On 25 th October 2010 BREEZE Project (China) Ltd. received its
business registration and started activities in international transport
concentrating on oversized and out of gauge project equipment and
heavy machinery. BREEZE Project (China) Ltd. is directly involved
with the transport of equipment to the Mongolian and Chinese
mining industry from global origins.
BREEZE headquarters are in Hamburg, Germany under the name
BREEZE Project (Germany) GmbH with partners in Argentina,
Brazil, India, USA, Austria, Italy, Poland and Russia.
Jochen P. Draeger is the director of the Shanghai establishment.
His preceding post was in the office of BREEZE Project (Germany)
Gmbh in Hamburg. Prior to joining BREEZE, Mr. Draeger’s activities
included positions with both international freight forwarders and
ocean carriers in USA, Saudi Arabia, Kuwait and Austria.
12
www.china.ahk.de
InterContinental Earns Certificate of Excellence
Guests have given InterContinental
Shanghai Pudong a Tripadvisor rating of 4.5,
earning the hotel a Tripadvisor Certificate of
Excellence for the year 2010.
“It’s always good to hear the real voice about
our business – particularly when they come
from the people who matter the most, our
guests – to get to know how they really feel,
what they really want and to “aim higher”
to an even more successful 2011,” said Mr.
James Koratzopoulos, general manager of
InterContinental Shanghai Pudong.
Freudenberg IT China Signs
Contract with SAP as First
China Partner
Considering the wide customer
p o r t f o l i o s a n d t h e s t ro n g m a r k e t
position, Freudenberg IT China has
signed a contract for subscriptionbased hosting (SBH) as the first SAP
partner in China. SBH provides small
and medium-sized enterprises with an
attractive pricing model. Freudenberg
IT China therefore offers medium-sized
companies a hosted SAP® Business Allin-One solution at fixed subscription cost.
By externally hosting the software user
are charged a monthly subscription fee.
In addition, customers avoid up-front
software licensing fees and hardware
purchase charges – freeing them from
the need to maintain or support an onpremise solution within their own IT
infrastructure.
TripAdvisor is the world's largest travel
site that allows customers to gather travel
information, to post reviews and opinions
of travel related content and to engage in
interactive travel forums.
13
BUSINESS FOCUS
Premier Wen Jiabao Visits Kingdee Software Park
Communist Party of China (CPC) Central Committee Political
Bureau Standing Committee Member and State Council Premier
Wen Jiabao visited Kingdee International Software Group Co. Ltd.
in Shenzhen (SEHK: 268) on 21st August 2010. Premier Wen was
accompanied by about 50 officials of the Government of the People's
Republic of China.
International Kindergarten - 国际幼儿园
Beijing
Registration now open
for 2011 Spring and Fall terms
HoK is a multilingual, international kindergarten with
locations near Chaoyang Park and Shunyi. At our state of
the art schools, we offer programs in English, German
and Mandarin for kids aged 12 months to 6 years.
www.house-of-knowledge.net
14
Make an appointment to visit today! [email protected]
House of Knowledge
Tel: 6434 0088
Premier Wen gave an inspiring speech to the Kingdee’s R&D
knowledge workers: “My understanding is that the software industry
is the equivalent of ‘Brainpower + the Market’… The Group’s
software business covers enterprise management and administrative
management, from manufacturing to business. All these hinge on the
application of software… The two sides of ‘Brainpower + the Market’
are both infinite: the market is very broad approaching infinity. The
potential of human brainpower and intelligence are infinite. You
should strive hard to advance on these two infinite fronts, utilising
your bright mind and serving enterprises, administrations and
businesses, aiding all of them to improve efficiencies. Wherein does
the most important competitiveness reside that we always talk about?
How can we achieve the highest efficiency? We believe that the answer
to both rest in intellectual property rights, in standards, in branding,
and in management. All of these aspects are closely connected with
software. I hope that you once again can continue to make new
achievements from your devotion towards these two infinites.”
METRO Accelerates Expansion in Q4 2010
In the last quarter of 2010, METRO Cash & Carry, the international
leader in self-service wholesale, accelerated expansion in China. With
3 outlets opened in Shanghai, Guangzhou and Yantai, the company
boasts a network of 48 stores across the country.
With “METRO For HoReCa”, located in Shangai’s downtown
Huaihai Road, METRO introduced a brand new store format tailored
exclusively to the needs of hotels, restaurants and caterers. For
instance, food products make up 90% of all 6,000 products available,
with fresh goods accounting for 45%. “The innovative store format
will help us gain greater market share in the wholesale sector and
accelerate expansion,” said Mr. Tino Zeiske, President of METRO
Cash & Carry China. “China is one of the most important markets of
our Group and will drive our future growth.”
www.china.ahk.de
Lindner China Takes Part in First Environmental
Neutral Skyscraper of the World
The “Pearl River Tower” in Guangzhou will be the first
environmental-neutral skyscraper worldwide. For the American
project manager Roger Frechette, it is not only a “green” symbol of a
changing China, but a milestone for architecture and a big challenge
on the way to complete environmental buildings.
The tower uses only natural energy sources in its immediate
environment and could, in certain circumstances, even produce
more energy than it needs. Boasting integrated solar cells, wind
turbines and through the installation of a special rounded Lindner
metal chilled ceiling system with a suspended light post cap, both
the indirect light and the energy efficient discharging of the heating
loads will be combined into one system. Recently, Lindner Chilled
Ceiling systems have been gaining popularity in China as an
alternative for classic air conditioning systems.
Grand Opening of MATSU's Shanghai
Flagship Showroom
The grand opening of MATSU’s newly built Shanghai flagship
showroom took place on 12th November 2010. The event attracted
many nationally known designers and industry professionals.
Guests came to see the new showroom from as far away as
Germany, home country of MATSU’s eight partner companies.
The new MATSU showroom exemplifies a high-end working
environment that is comfortable, efficient, inspiring, innovative
and functional, and provides an inspiring office lifestyle.
Designed by a famous Swiss design firm in a contemporary
European style, MATSU’s new showroom is located at 686
Zhaojiabang Road, in the former French Concession area. The
facade’s design features ginkgo leaves – a spiritual symbol and
a part of MATSU's heritage. Thus, the theme selected for the
opening ceremony was: MATSU - Leaves of Design.
Lufthansa Shanghai Relocates
Lufthansa Shanghai Office moved to a new office location on 20th
December 2010. The move was decided to widen Lufthansa’s service
offering and better contribute to the success of its partners in Shanghai.
Located in the Henderson Metropolitan (300 East Nanjing road, suite
801-803, Shanghai 200001) in the commercial hub of Shanghai, the
new office is well situated to help Lufthansa’s multinational clients
leverage the many exciting business opportunities available in this
vibrant, entrepreneurial city.
15
BUSINESS FOCUS
MAN Diesel & Turbo Celebrates 30 Years in China
At a ceremony in Beijing attended by business
partners and local dignitaries, MAN Diesel &
Turbo celebrated three decades of success in
China, the world’s biggest shipbuilding nation.
MAN Diesel & Turbo’s licence history in
China started in July 1980 when the China
Corporation of Shipbuilding Industry signed
an agreement for building diesel engines
according to MAN designs.
“As of today, our Chinese licencees have delivered over 4,000 engines, in a power range
from 430kW to 45,000kW per engine,” explains
Mr. Götz Kassing, Managing Director of MAN
Diesel Shanghai Co. Ltd. Over 200 employees
in the MAN Engine & Marine Systems sector
support 20 engine builders as well as shipyards
and owners. Mr. Kassing predicts the current
growth will continue and is certain that “cooperation with Chinese partners will continue
and deepen over the many coming years”.
Yingli Supplier Award to Reis Robotics
photovoltaic
manufacturers.
Yingli Green Energy (NYSE:YGE, “Yingli”)
is a leading solar energy company with an
annual production capacity of 1GW. It is one
of the world’s largest vertically integrated
On 1 st November
2010, Yingli Green
Energy organised
its first annual
supplier’s meeting
in Baoding,
during which
Reis Robotics was
recognised as
one of the most
performing and reliable suppliers in 2010.
The successful commissioning of equipment
was exemplary and boosted confidence and
cooperation between Yingli and Reis.
Oldenburger Appoints New Head of Project Management
In his prior positions
in European companies, he streamlined
operations to improve cost control
and efficiency in
production and administration.
Mr. Kay Thiede joined Oldenburger Interior
Products (Shanghai), OIP, in November 2010
to overtake the Projects Department. With
more than ten years experience in the furniture industry, Mr. Thiede is responsible for
calculation, sales and project management.
16
In December 2010,
OIP celebrated their
fifth anniversary in China. The company
has grown from only a handful of workers
to currently more than 100. The company
manufactures furniture for luxurious labels,
five-star hotels and apartments, showrooms
and exhibitions.
SAL Puts World’s Largest
Heavy Lift Vessel “Svenja”
into Service
SAL Schiffahrtskontor Altes Land put the
first of two new buildings of Type 183 into
service. With a lifting capacity of 2,000t and
a speed of 20kn, its the world’s largest heavy
lift vessel to date.
SAL, which ranks among the leading
international heavy lift shipping companies
and is based in Steinkirchen near Hamburg,
commissioned the Sietas shipyard in
Hamburg with the design and construction.
The shipping company and the shipyard
worked closely together to build this
innovative vessel in just six months.
On 9th December 2010, the heavy lift vessel
was christened at the “Überseebrücke”
bridge in its home port of Hamburg. The
next day, the MV “Svenja” embarked on its
maiden voyage towards the Far East. When
it returns to Europe, it will transport complex
“templates” for offshore oil exploration along
the Norwegian coast. The offshore energy
sector – including oil, gas and wind – will be
one of the core segments of employment for
this highly specialised vessel.
www.china.ahk.de
MRI China Group Wins Fifth CCH China STAFF
Recruitment Firm of the Year Award
The MRI China Group has again been
awarded the prestigious CCH China
STAFF Recruitment Firm of the Year
Award. The company previously won the
award in 2003, 2005, 2006, 2007 and 2009.
The award demonstrates MRI China
Group’s position as the undisputed
leader in executive recruitment. For the
first time, it recognises a recruitment
process outsourcing solution delivered
by Tal-os Asia, a subsidiary of the Group.
Mr. Chris Watkins, China Country
Manager of MRI China Group, accepted
the award at the 13 th annual ceremony.
The event was attended by more than 200
people, including HR professionals and
senior managers from multinational and
local companies. “We are excited to have
received this award. It is a testament
to the unique solutions we provide our
clients with,” remarked Mr. Watkins.
Ingenics Continues Its
Expansion Course…
To facilitate its continued strong growth in
China, Ingenics moved office to the Shanghai
Stock Exchange Building in the Lujiazui
Financial District of Shanghai in January 2011.
Ingenics, a company specializing in Factory
and Production Planning, Logistics Planning
and Efficiency Improvement has been active in
China for more than a decade. This is already
the third stage of expansion in China, since the
initial office was set up in 2005 in Shanghai.
“The success of many global corporations is
now directly linked to their success in China”,
says Mr. Raymond Brady, General Manager
of Ingenics Consulting (Shanghai) Co., Ltd.
“Having a competent planning partner in
China is one of the keys to the suc-cessful
establishment or expansion of your business”.
The larger new office enables Ingenics to further
expand its activities in China, thus enable
Ingenics to support its customers at its best.
17
BUSINESS FOCUS
Siemens Opens Its First Wind Turbine Blade Facility in China
Siemens continues to expand its
international manufacturing network in
key markets. On 30th November 2010, the
company officially celebrated the grand
opening of Siemens Wind Power Blades
(Shanghai) Co. Ltd. (SWPB) in Shanghai.
Attending the event were Mr. Wolfgang
Dehen, CEO of the Siemens Energy Sector
and member of the Managing Board of
Siemens AG, and Mr. Mei-Wei Cheng, CEO
Siemens North East Asia and President
and CEO of Siemens Ltd. China.
As Siemens’ first manufacturing plant for
wind turbine components in China, the
factory has a designed annual production
capacity of over 600 wind turbine blades,
which will be able to meet more effectively
the strong demand for wind turbine
equipment in China, as well as the export
market. The total investment is about EUR
35mn.
Salans Welcomes New Partner
Mr. Germain
Sinpraseuth has
joined the Shanghai
office of the Salans
international law
firm in November
2010.
M r. S i n p r a s e u t h
has been based in
China for more than
seven years. He specialises in M&A and in
assisting foreign clients investing in China,
from the early stage of structuring the
project financing to the ongoing operation
of their business. His clients vary from the
service sector (mainly logistics, security
solutions, insurance brokerage, franchising
and e-commerce) to manufacturing and
distribution of textiles, luxury products,
cosmetics, automotive, medical equipments
and new technologies.
Mr. Sinpraseuth is multilingual and speaks
French, English, Mandarin, Lao and Thai.
He has worked on projects related to
Indonesia, the Philippines, Malaysia and
Vietnam, and has also assisted Chinese
clients in outbound investment projects in
Europe and the United States of America.
18
www.china.ahk.de
Star Grows in China
TÜV SÜD Ningbo Relocates Office
All beginnings are difficult. And so were the beginnings of Star
Engineering in China. Mr. Yan Liu and Mr. Udo Gottlieb worked
out of a hotel room until the summer of 2010. Finally, on 10th
June 2010, Star Engineering & Consulting (Shanghai) Co. Ltd.
officially established and staffed an office in Shanghai. Eight
Chinese employees, four German expatriates and Mr. Yan Liu
and Mr. Udo Gottlieb work on site. In 2011, the head count will
grow.
The TÜV SÜD Ningbo office recently celebrated the 2010 year end
with a relocation ceremony under the theme of cooperation between
3rd parties, government and enterprises to support the Ningbo trading
industry’s development.
Star’s customers include VW and BMW. They support the two
car manufacturers in China in, among other things, product
management, supplier management and quality management,
development and homologation. Furthermore, Star conducts 1st
and 2nd tier supplier audits. The most recent highlight this year
was the entrance of two colleagues in the BMW office in Beijing.
In 2011, Star aims to expand its clients’ activities and increase its
number of employees in China.
Established in 2003, the Ningbo office is the TÜV SÜD Zhejiang
strategy area’s headquarter. TÜV SÜD has a complete network
of services, giving Zhejiang entrepreneurs access to cutting-edge
technology. The company pays special attention to product quality,
technical innovation and environmental protection in Zhejiang
province. To support this, TÜV SÜD is always on the forefront of
innovation. In the past few years, it has expanded into new areas, such
as renewable energy, energy efficiency and E-mobility. In addition,
with China's rapid growing economy, the former “Made-in-China”
export products have gradually transformed into “Made-for-China”
products. TÜV SÜD is dedicated to supporting China’s modernisation
process in environmental protection and energy efficiency.
TKSE Strengthens Market Position
ThyssenKrupp System Engineering (Shanghai) Co. Ltd. (TKSE)
celebrated its second leap forward in the same quarter. After its
relocation to a new facility on 18th October 2010, TKSE held an
opening ceremony in early December to mark the visit of Board
members from German headquarters.
After the growth from an office to a manufacturing company
in 2008, TKSE has continually strengthened its market position
and enlarged its customer portfolio. Besides Body-in-White
and Assembly System, its Testing Solution business unit strives
to attract more local customers. From design and planning, to
manufacturing and assembly, to installation and commissioning,
TKSE completes its equipment delivery with technical services.
As a trustworthy partner to automotive manufacturers and their
power train suppliers, TKSE CN values customer satisfaction and
continuous improvement. With an aggressive business plan, TKSE
expects more progress this year.
EWM焊接技术扎根中国
以德国最先进的技术服务于中国和亚洲
EWM WELDING TECHNOLOGY MADE IN CHINA
GERMAN STATE-OF-THE-ART TECHNOLOGY FOR CHINA AND ASIA
手弧焊
MMA welding
钨极氩弧焊
TIG welding
伊达高科焊接 (昆山)有限公司
EWM Kunshan, China
熔化极气体保护焊
MIG/MAG welding
等离子焊
PLASMA welding
伊达高科焊接德国总部
EWM Mündersbach, Germany
EWM HIGHTEC WELDING (Kunshan) Ltd.
10 Yuanshan Road,
Kunshan New & High-Tech Industry Development Zone,
Kunshan, Jiangsu, 215300 P.R.China
伊达高科焊接(昆山)有限公司
江苏省昆山市昆山高新技术产业开发区圆山路10号
邮编: 215300
Phone: +86(0) 512 57867188
Fax: +86(0)512 57867182
www.ewm.cn · [email protected]
TKSE CN’s new facility in Gaodong Industrial Zone.
19
BUSINESS FOCUS
New Management Team at
Voith Industrial Services China
In September 2010, Voith Industrial Services
(Shanghai) Co. Ltd. (VISH) welcomed Mr.
Gerwin Gaedigk as Managing Director
VISH, Mr. Guenther Bach-Bezenar as
Business Development Senior Director
V I S H , a n d M r. M a r c o S e n n h e n n a s
Operation Development Director VISH.
Mr. Gaedigk, a skilled mechanical engineer
with years of leadership experience in
machine tool companies, joined the Voith
group as Managing Director of Hörmann
Industrietechnik in September 2007. He has
been in the advisory board of VISH since
January 2009.
Virtuarch Completes New Landmark Industrial Project
On 24th November 2010, Sulzer Pumps held
the opening ceremony of its new worldclass pump factory with its staff, hundreds
of customers and government officials.
Virtuarch built a contemporary and
energy-saving design, giving the factory
a unique face. The 21,300m2 GFA project,
with a landmark 3 storey office building
largely based on comfortable open space
offices, has already proven to be a perfect
working environment for the highly
qualified staff of Sulzer. The administrative
b u i l d i n g i s d e s g i n e d l i k e a t h re e dimensional Suzhou garden. Dominated
by green courtyards and multiple visual
connections, it allows each staff to have a
direct connection to nature. An intelligent
sunblind system integrated into the highperformance curtain wall facade reflects
the right amount of light into the building,
while keeping the building cool. A flying
roof structure combined with the shape of
the warehouse gives a unique and modern
shape to the whole project.
Waldorf Astoria Shanghai Opens on the Bund
The new Waldorf Astoria Shanghai opened
on the Bund in September 2010. The
luxury hotel consists of a heritage building
connected to a new tower by a courtyard.
The new tower houses 252 rooms, with
a l m o s t h a l f o f t h e ro o m s o ff e r i n g a
completely unobstructed, panoramic view
of the Shanghai skyline along the Huangpu
River. In addition to the residential butlers
serving in the heritage building, there are
personal assistants providing complete
services to guests in the new tower of the
Waldorf Astoria. The hotel now boasts six
dining and lounge venues set to become the
city’s premier hotspots.
20
M r. B a c h - B e z e n a r s t u d i e d e l e c t r i c a l
engineering and worked in management
and business development before
joining Voith. He worked at Hörmann
Industrietechnik, which later became a Voith
company. In April 2007, he became Sales
Director for the Voith Industrial Services
Process Services division. He was also
member of the management board of this
division.
M r. S e n n h e n n g a i n e d e x p e r i e n c e i n
operational business with China at his
previous employer, Dürr. He has worked
in different locations in China for several
years. He joined Voith in 2005, starting out
as Technical Manager, Regional Manager
Nuremberg and then Business Improvement
Manager. His most recent position was
Regional Director APS Europe.
www.china.ahk.de
KSB Wins Bid for Largest Seawater
Desalination Project in China
BUREAU VERITAS Introduces New German
Key Account Manager – ALEX SCHOPP
The Caofeidian Seawater Desalination Project is located in
Caofeidian Industrial Zone in Tangshan City. With a daily
processing capacity of 50,000t, it is the largest seawater desalination
project in China. This project will provide effective water-supply
guarantee for the future industrial concentration and rapid
development in Caofeidian. Meanwhile, the output of desalinated
seawater will be gradually raised to 700,000t/d in the 15 years to
come, according to the industrial development and demand for
fresh water in Caofeidian Industrial Zone.
BUREAU VERITAS China
is pleased to announce
the recent arrival of ALEX
SCHOPP, a native of Koblenz
near Frankfurt. As the
German Account Manager
w i t h i n B u r e a u Ve r i t a s
China’s Building & Facilities
Department, Mr Schopp
is responsible for working
with German SMEs and
multinationals seeking to
establish and maintain new
and existing facilities. Bureau
Veritas, a global leader in
QSHE services, operates in 140 countries through a network of over
1000 offices and laboratories.
KSB has provided excellent solutions for Caofeidian Seawater
Desalination Project and has supplied over 50 sets of top-quality
equipment, including water pumps, high-pressure pumps, booster
pumps and auxiliary pumps.
In China, Bureau Veritas employs over 7,500 employees across 25
offices. Bureau Veritas Building & Facilities offers new construction
services such as Environmental and Technical Due Diligence,
Construction Project Management, QA/QC Inspection, HSE
Auditing and Green Building Consulting. Services for buildings
in operation include Fire System Testing & Consulting, Structural
Investigation, Mechanical & Electrical Auditing, Energy Efficiency
Consultancy and extensive training services. In China, Bureau
Veritas works with clients such as METRO, BOSCH SIEMENS
HOUSEHOLD, BEIERSDORF, MIELE, LINDE, AMECO, GEA,
BAYER, SGL GROUP.
Investing in China?
We are expecting you.
As more and more businesses seek to capitalize on the exceptional
growth opportunities offered in China, KPMG provides a coordinated
support network of country specialists to assist companies with
their cross-border activities.
Whether you are planning a new entry into China, an expansion
of your market presence on the ground or seek further efficiency
or transparency of your business operations in China, our KPMG
experts on location in China as well as in Germany will help
you succeed
For further information please contact:
Andrea Riedmann, Audit, Schanghai,
T +86 21 2212-2550, [email protected]
Andreas Feege, Audit, Peking,
Richard Stoffelen, Audit, Hongkong
kpmg.de/highgrowthmarkets
21
BUSINESS FOCUS
MEMBER NEWS SOUTH & SOUTHWEST CHINA
MEMBER NEWS
SOUTH & Southwest CHINA
Performing at the first carbon- neutral concert in China: Mr. Wang Leehom.
“Santa Clause” Delivers Christmas Presents to Qingyuan
O n 2 1 s t D e c e m b e r, d ro m F r a g r a n c e s
International Guangzhou Ltd. and GCC
• South & Southwest China visited the
Qingyuan Social Welfare Institute to deliver
some Christmas greetings and several boxes
of presents to more than 80 mostly disabled
orphans. In cooperation with the Ursula
Help Foundation, drom Fragances aims
to improve the rehabilitation facilities and
living conditions of children on a long-term
basis. The foundation was established by the
perfume manufacturer in 2006 and is named
after Ms. Ursula Storp, the mother of Dr.
Ferdinand Storp and Dr. Andreas Storp who
operate the international family business.
Over 250 participants, including about 60
children, attended the successful 2010 St.
Nicholas Celebration on 5th December 2010
at the Bierhaus Shekou. From brunch time
onwards, the guests enjoyed a sunny day
with their families, friends and countrymen.
All had their fill of German food & beer,
mulled wine, live music and many presents
22
Renowned singer, Mr. Wang Leehom performed the first carbon-neutral concert
in China on 11th November 2010. Entitled
“Earthkeepers 2010”, the concert was
sponsored by Timberland under its Earthkeepers initiative, and was supported by
Tuev Rheinland.
To offset generated carbon dioxide emissions and to achieve zero carbon targets,
Timberland purchased carbon emission
reduction credits. Leading certification body TÜV Rheinland provided full
professional support in the evaluation
of carbon neutrality of this concert. The
company provided the necessary carbon
footprint measurement for Timberland to
achieve the carbon neutral goal, and voluntarily became an emissions pioneer in
China.
TÜV Rheinland performed the on-site
audit, and collected and calculated data
from a variety of sources of greenhouse
gas emissions and carbon footprint for
this activity. After strict measurement
procedures, Timberland was awarded the
carbon neutral certificate.
Helping Disabled Children Brick
by Brick
On a Christmas mission: Drom Fragrances and
GCC • South & Southwest China hand over
presents at the Qingyuan Social Welfare Institute
OBC Express Gives Back in Shenzhen
OBC Express Ltd. once again organised St.
Nicholas Day celebrations for the German
community in Shenzhen. Initiated four years
ago as the German Evening with only twelve
guests attending, it is now a series of eight
events, including three St. Nicholas Day
celebrations. Organised and financed 100% by
OBC, the German Evening is always free. With
this, General Manager Mr. Wolfgang Schneider
unites the community, and collects donations
for an orphanage project in India, which he has
been supporting for years.
TÜV Rheinland Supports
First Carbon Neutral
Concert in China
from St. Nicholas. It was a happy day for
Germans in Shenzhen, but also for the
orphanage in India – with a total record
donation of RMB 18,000.
Mr. Wolfgang Schneider at the opening speech
and Christmas carol singing with the German
community in Shenzhen.
The Ritz-Carlton Hotel Shenzhen
incorporated the traditional and annual
Christmas gingerbread house into its 2010
Community Footprint Programme. From
23rd November to 30th December 2010, hotel
staff, guests and community members were
invited to participate in an activity called: “A
Gingerbread House Built with Love”.
In exchange for a donation of RMB 88
that went straight to the Shenzhen Min
Ai Disabled Children’s Welfare Centre,
the participants received a home-made
gingerbread brick that was theirs to decorate
with frosting and good tidings. While
converting their ideas into practice, the small
participants were actively supported by the
hotel’s pastry chefs.
General Manager, Mr. Iwan Dietschi helps a child
paste a gingerbread brick.
Dine. Recline. Combine.
Get China-wide rewards with our Benefit Program.
All members of the German Chamber of Commerce can enjoy
advantages at selected restaurants, service centres and spas.
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For more information about the Benefit Program go to
www.china.ahk.de or send an email to [email protected]
23
BUSINESS FOCUS
COVER STORY
Recruiting and Retaining
Generation Y Employees:
Attraction and Engagement in China
After the expression “War for Talent” was
coined in 1997 by McKinsey & Company,
it became clear that the scarcity of qualified
professionals and the high turnover rates
across industries and regions posed a real
threat or, at least, a limiting growth factor for
most foreign enterprises operating in China.
Despite all the talk on how to calibrate a
company’s talent management to deal with this
challenge, most discussions have been around
generic approaches to the workforce at large,
without considering the intrinsic differences
between generations. This article argues that
the difference between Generation Y and prior
generations is significant, and that the key
to tackling the talent challenge in China is to
develop an adapted approach to recruitment
and retention in order to attract and engage
Generation Y employees.
Table 1: Core values and defining
adjectives of Generation Y
(Universum, 2010)
Core Values
Optimism
Civic duty
Confidence
Inclusion
Morality
Savvy
Achievement
Defining Adjectives
Special
Sheltered
Confident
Team-oriented
Achieving
Pressured
Conventional
Generation Y is equipped with a higher sense
of entitlement, value orientation and a need
for achievement, which transcends financial
success. While wealth levels have grown more
than thirty fold since Mr. Deng Xiaoping’s
economic reforms in the early 1980s, there has
been a tectonic shift in the underlying basic
Graphic 1: Time line of Generation Y’s move into the workforce
GenY enters University
1980
1990
1998
2002
2008
GenY is born
Generation Y includes members of the workforce born between 1980 and 1990. According
to Business Week (2010), this generation already makes up more than 50% of the workingage population in China and will dominate
the workforce for the next 15 years to come.
Graph 1 depicts the most critical time horizons
to consider about Generation Y’s entry into the
Chinese workforce. While Baby Boomers and
Generation X are still dominating top management positions in China, Generation Y talent
is flowing into middle management and team
leadership roles, quickly gaining in significance
due to their sheer number, as well as by moving into key positions within most organisations. Therefore, it is worth taking a closer
look at what drives this generation and how
to incorporate these insights into a company’s
approach to recruitment and retention. Table 1
provides an overview of core values and defining adjectives driving Generation Y.
24
2012
GenY enters workforce
needs. Generation Y expects these needs to be
fulfilled by their employers. As a matter of fact,
for the majority of Generation Y, the lack of
financial means has never posed an immediate
threat towards their existence within their
lifetime. The developmental psychologist, Mr.
Abraham Maslow has already established
Table 2: Comparing Generation X
and Generation Y (Universum, 2010)
Generation X
(born: 1970–1980)
Generation Y
(born: 1980–1990)
Strive for work/
life balance
Assume they will have work/
life balance
View work as “just a job”
Expect to make a difference
through work
Adoptive and responsive to
change
Lack of resilience,
inexperience with hardship
Street Smart
Savvy
Cautious in giving trust and
loyalty
Value social and corporate
responsibility
Look to their peers for advice
Expect clear structure/
guidance from supervisors
Interested in technology
Internet Connected
in his known work “Theory of Human
Motivation” (1943) that such lack of threats and
deficiencies results in the development of more
transcended levels of needs. His theory helps
understanding the shift of the underlying needs
from older workforce generations, emphasising
monetary rewards and basic employment
security, towards younger generations seeking
higher levels of belonging, esteem and selfactualisation in their work. Table 2 reveals
the differences between Generation X’s and
Generation Y’s expectations of the work place.
Furthermore, it is important to note that
contrary to common misconceptions about
social trends in China, Generation Y is not
“westernising”, but rather “modernising”
(Business Week, 2010). The self-confidence in
being “made or born in China” has never been
Table 3: Employer Brand Ranking in
Engineering in China 2006 vs. 2010
(Universum, 2010)
Companies 2006
IBM
China Mobile
Microsoft
Google
Rank
1
2
3
4
Procter & Gamble
Huawei
Intel
Siemens
Nokia
Haier
5
6
7
8
9
10
Companies 2010
China Mobile
SGCC
CGNPC
PetroChina
Company
Google
Sinopec
Huawei
ChinaTelecom
China FAW Group
Microsoft
Rank
1
2
3
4
5
6
7
8
9
10
higher. A case in point is the significant increase
in popularity of Chinese employers among
engineering graduates (Table 3).
Generation Y in China has a very strong value
orientation when looking for an employer.
This is why it is imperative for companies to
look at recruitment and retention collectively
rather than isolated. The corresponding success
factors linked to sustainable retention have
a significant impact on the ability to attract
Generation Y in the recruitment process.
When looking at recruitment and retention of
Generation Y in China, it is therefore critical
to understand what attracts Generation Y
candidates to an organisation, and what makes
www.china.ahk.de
Generation Y employees stay and perform
within organisations.
Attractors & Engagers
Attractors are visible differentiators in the
labour market helping to establish first points
of attraction for employers in the perception
of candidates. Engagers are retention drivers,
which convince Generation Y to invest their
time and effort into the organisation. It should
be noted, that, unless attractors are effectively
confirmed by the experience of a “sticky” work
environment, facilitated by engagers, the effect
is short-term and only valuable in capturing
the attention during the hiring process as well
as in the early employment stage. Therefore,
attractors are hygiene factors, which in isolation
do not provide the long-term satisfaction
needed for sustainable retention, but are swiftly
taken for granted. Engagers are summarised in
Table 5 as a blend of corporate culture, the job
mix, and leadership.
Attractor - Differentiated and value oriented
employer branding: While an increasing
scarcity of qualified professionals is providing
candidates a broader set of career options
to choose from, employer branding enables
companies in China to differentiate themselves
vis-à-vis the talent acquisition competition.
Messages signalled through a company’s
employer brand towards Generation Y in
China should be in line with the statements in
Table 4 in order to be effective.
Table 4: Attractive messages for
Generation Y (Universum, 2010)
“You’ll be with other bright, creative people.”
“You and your peers can help turn the corporate world around.”
“Your work will be challenging and meaningful.”
“You’ll be able to meet your personal goals.”
“You will have a mentor.”
Attractor - Holistic compensation models:
Generation Y is continuously benchmarking
their status-quo of compensation against
the market, not only within China but also
in an international context. Compensation
is considered a reflection of the employer’s
commitment towards the employee. Clear
and continuous compensation development
throughout the employment lifetime is
considered more important than starting
salaries. Therefore, compensation models
should incorporate clear salary development
guidelines, generous annual leave entitlement,
pension, life and medical insurance, and
housing fund, which do not only meet legal
obligations but are benchmarked against the
market.
Attractor - Recruitment process: Generation Y
is knowledgeable, well prepared and critical
when entering the recruitment process.
Therefore the involvement of hiring managers
as “Sales Persons” of the organisation in the
recruitment process is an effective tool to gain
their attention. Furthermore it is important
to show clear structures and to reduce any
ambiguity related to the company or work
environment. Finally, revealing future
perspectives within the company linking
professional development with learning
opportunities and compensation is imperative
to maintain high levels of interest.
Engager - Culture: In order to engage
Generation Y, it is critical to nurture the bond
between an individual employee and the coworkers, the supervisors and the organisation
at large. These bonds are personal in nature
and only collectively can they become a “sticky”
organisational culture. Despite their desire for
strong ties to the people in their work place,
Generation Y is competitive and has a sense
for achievement. However, this has a more
complex manifestation than Generation X, as
Generation Y considers more performance
parametres than just individual quantitative
targets. Generation Y emphasises worklife balance and appreciates employers who
provide the necessary flexibility to correspond
to personal needs, e.g. working times, working
location or recreation.
Engager - Job mix: Generation Y easily gets
bored by singular activities. Asking Generation
Y in China about what they expect from
their work reveals universal concepts such
as “communication” to be important rather
than specific activities. They expect stretch
assignments, even if they might not yet be
technically equipped for them, with intensive
guidance from the supervisor if necessary.
Engager - Leadership: Despite the fact that
Generation Y is more self-confident than
previous generations, they often have no
clear targets concerning what type of specific
job content they are seeking or in which
specific functional role they see themselves
now or in the near future. They have a better
understanding of how the work needs to
feel. To find the right career path and job
content, they expect mentorship, guidance and
leadership from their supervisors. Generation Y
has an ambivalent relationship with authority.
On the one hand, Generation Y requires clear
leadership, structures, and guidelines. On the
Table 5: Effective engagers for
Generation Y
Culture
(1) Personal and responsive, (2) Achievement
orientation, (3) Flexibility
Job Mix
(1) Stretch Assignments, (2) Diverse Learning
Opportunities, (3) Compensation
Leadership
(1) Mentorship, (2) Feedback,
(3) Entrepreneurship
other hand, they expect leaders to facilitate
two-way communication and to be open to
criticism.
In conclusion, managing Generation Y is often
a challenge for Chinese as well as for foreign
managers. However, given the importance of
Generation Y as the single most important asset
to the Chinese economy for at least the next 15
years to come, it is imperative that companies
and their managers adapt their talent
management approach to meet the demands
of Generation Y. The attractors and engagers
propose how to take first steps into a suitable
working environment, and how to effectively
recruit and retain Generation Y.
Authors:
Michael Maeder is Practice Leader
Automotive & Industrial with Direct HR, a
boutique recruitment firm with offices in
Shanghai, Beijing, Shenzhen, Ningbo,
Chengdu, and Guangzhou. For more
information, please contact Mr. Maeder:
* [email protected].
Johan Ramel is the CEO of Universum
Group in the Asia Pacific Region. Universum
is the world leader in employer branding,
with operations in more than 30 countries.
For more information, please contact Mr.
Ramel:
* [email protected]
25
BUSINESS FOCUS
COVER STORY
Stirred
Assurance
From mid-2011 on, a new law
changes the way Chinese and foreign
employees are socially insured
O n 2 8 th O c t o b e r 2 0 1 0 , t h e S t a n d i n g
Committee of the National People’s Congress
promulgated the Social Insurance Law of
the People’s Republic of China (“Law”). The
Law will become effective on 1st July 2011.
With almost 100 articles in twelve chapters,
it required 16 years of discussions and more
than three years of actual legislation process.
For the first time, one law published on
the national level now jointly regulates all
key pillars of the social insurance system
in China. It will have significant impact on
China’s overall development and social
stability in the coming decades.
The Law completes the overall HR legislative
framework, which already included the
Labour Law, Labour Contract Law, Civil
Service Law, Employment Promotion Law,
and the Labour Dispute and Mediation Law.
In guidelines issued on 6th November 2010,
the Ministry of Human Resources and
Social Security (MHRSS) points out, among
others, the aim to abolish existing systemic
obstacles regarding the free flow of talent
and employment mobility between regions.
By 2020, full social insurance coverage for all
urban and rural residents will be achieved.
Five Pillars
The five mandatory social insurances for all
employees are:
Basic pension
Basic medical
Work-related injury
Unemployment
Maternity
Ultimately, the basic pension system will be
unified nationwide, whereas the other four
insurances will be unified on the provincial
level. The detailed timeline for such
unifications still needs to be decided.
Basic pension, basic medical and
unemployment insurance – where also
contributions by individual employees are
required – will become transferable between
26
different locations in
China, including the
setting-up of a crossprovincial medical
expense settlement
system.
To facilitate quick
aid, the basic
medical and workrelated injury
insurance allow the
respective funds to
be paid in advance
to an employee, even if a third party or the
employer is actually liable for payment. The
funds would then seek recourse against the
third party or the employer later.
Individual business owners, part-timers and
freelancers now have the right to voluntarily
participate in the basic pension and basic
medical insurance.
The various links between the different
insurance types are particularly important.
As an example, certain disability subsidies
for work-related injuries and unemployment
benefits are only enjoyed until retirement. In
principle, subject to certain preconditions,
no further contributions to the basic medical
insurance are required after retirement.
The payment responsibility regarding
subsidies for certain incidents (e.g. the death
of a person) can shift from fund to fund,
depending on the situation of the employee.
After retirement, the pension fund would
take care of the funeral subsidy, whereas
during unemployment or after a workrelated injury, the unemployment fund or
work-related injury fund would respectively
be responsible.
Potential Mandatory Participation by
Foreigners
Whereas rural workers in cities participate
“according to” the Law, foreigners participate
“by reference”. China Daily reported Mr. Hu
Xiaoyi, Vice-Minister of the MHRSS, saying
during a news conference in October 2010
that “the regulation follows international
practice and gives equal national treatment
to foreigners working in the country". Mr.
Hu also said that, to avoid foreign employees
paying into social insurance programs in
China and their homelands, Beijing would sign
bilateral agreements on social insurance with
other countries. Such an agreement regarding
pension and unemployment insurance is
already in effect between Germany and China
since 2002. Similar to a double taxation treaty, it
tries to avoid a double social insurance subject
to certain preconditions, but may not work for
all foreign staff. A careful legal analysis of each
individual case is needed.
In the guidelines issued on 6 th November
2010, the MHRSS stated that foreigners
“shall participate by reference”. Legally,
the term “shall” is usually understood as
referring to a mandatory obligation, and this
increased the speculations of a mandatory
participation by foreigners being imminent.
The required administrative tools to include
foreigners are already in place: voluntary
coverage regarding basic pension, basic
medical and work-related injury insurance is
already offered by various cities (including
Shanghai).
Based on the current local regulations, upon the
foreigner’s departure from China, certain parts
of the accruals are expected to be paid out.
However, experts have raised doubts
whether an immediate full mandatory
coverage of foreigners is indeed feasible.
Regarding maternity insurance, there are
already basic systemic differences due to the
fact that the current birth control regulations
do not apply to foreigners. And in case a
foreigner looses his job, this will normally
lead to the end of his work permit and
ultimately to his departure from China. This
is why the unemployment insurance might
www.china.ahk.de
How to prepare for the new Social Insurance Law
Companies should start preparing for the implementation of the new Law. This could
include:
l
Obtaining advice from a legal or tax advisor to understand the full implications of the
Law, and to continue monitoring developments;
l
Making sure that potential additional costs are budgeted for;
l
Informing the foreign head office abroad about the expected changes;
l
Clarifying the exact legal treatment of all employees, including migrant workers,
employees with “hukou” in other provinces, expatriate staff; and informing concerned
employees about potential changes;
l
Checking the status of, and if needed, updating the company’s social security
registration in China; and making sure a system is in place enabling the required
social security registration of individual employees within 30 days of joining (this is
also the deadline for concluding a written labour contract);
l
Carrying out required applications for existing expatriate staff who qualify for
exemptions under bilateral agreements (the German authorities for example at the
moment generally recommend respective applications at least 3 months in advance);
l
Setting up a system enabling the required monthly information to all employees on
their individual payment of social insurance premiums;
l
Setting up a system enabling timely issue of termination certificates to departing
employees, and required reporting of unemployment to relevant authorities within 15
days of departure.
potentially not be (immediately) made
applicable to foreigners.
More details are expected in other
regulations not yet available. It cannot be
excluded that the legislator might still revert
to a voluntary participation for foreigners as
it currently already exists in various cities.
Regarding an employee earning more than
RMB 10,698 (current maximum calculation
basis in Shanghai) per month, a full
mandatory participation in all five insurances
would – based on the 2010 rates in Shanghai
– lead to additional costs of roughly EUR 435
for the employer and roughly EUR 130 for
the employee (based on current exchange
rates). Depending on the ultimate decision
on the actual implementation for foreigners,
and the employee structure of a company,
substantial additional HR costs might occur
as of 1st July 2011.
He might also only decide on a partially
mandatory participation for foreigners (e.g.
mandatory contribution required by only
foreigners with a permanent residence).
In practice, delays regarding the local
implementation of foreigners might occur
(especially in less developed provinces).
Mr. Ralph Vigo Koppitz is a partner at the
Shanghai office of the international law firm
Taylor Wessing.
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APRIL 15 AND 16, 2011, COLOGNE, GERMANY
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Volkswagen China. Interested in participation? Contact in Germany - Dirk Meyer, [email protected]
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CHINA HR NETWORK
27
BUSINESS FOCUS
COVER STORY
Salary &
Retention
Aon Hewitt released its “2010 Shanghai City TCM Survey” on 5th November
2010. It covers salary increase rates, employee turnover rates, individual position
salary information and many other HR key indexes in the Shanghai area. This
survey covered 21 industries such as the automotive, consumer goods, chemical,
high-tech, insurance, pharmaceutical and machinery industries. 938 companies
participated in this survey, including 664 non-manufacturing companies and 274
manufacturing companies.
Salary Increase: Higher Than Expected,
C&B Costs Are on the Rise
According to the study, the actual salary
increase rate in 2010 was 8% in Shanghai. It is
1% higher than the forecast made last year. The
actual increase rate of 9.1% in pharmaceutical
industry is again the highest among all
industries. The high-tech industry, which was
hit the most by the global financial crisis last
year, ranked 2nd with 8.7% and 8.4% for its nonmanufacturing and manufacturing sectors
respectively.
The higher than expected increase rate may
have several causes. First, after freezing the
salary increase in 2009, many companies
added extra increases to compensate their
employees when business growth went back to
normal. Second, the inflation of consumer price
might have caused companies to add general
increases to maintain the purchasing power of
their employees. Furthermore, for the labour
intensive manufacturing companies, the major
increase on the minimal wage significantly
impacted their bottom lines. According to the
Chinese government’s “Citizen Income Double
Plan”, an average increase of 15% per year on
the minimal wage can be expected in the next
five years.
Employee Turnover: Voluntary Turnover is
Going Up; Employee Engagement Is the Key
According to the survey, the voluntary
turnover rates of Shanghai’s manufacturing
and non-manufacturing sectors are 14.3% and
16.4% respectively. Both are higher than last
year’s. Though the external competitiveness of
salary has been the major reason for employee
turnover throughout years, lack of career
development, lack of recognition and under-
28
utilisation of skills can heavily bring down
employees’ engagement.
Besides, on average 30% of employees in a
company are from the Generation Y, who are
distinctive in their self-central personalities.
Generation Y’s engagement in general is 5%
to 10% behind those in other age groups, but
they will soon, in the next five years, develop
into the major contributors in a company’s
total workforce. Thus, how to motivate and
stimulate the engagement of these future core
talents is the recent focus for human resource
management.
Talent War: The Gap Among Foreign
Invested Enterprises and Local Companies
Decreases. Focusing on the Employer Value
Proposition Would Lead to Success.
Local companies are increasing their investment
in human capital. Though their salary level is
still lower than foreign invested enterprises in
general, the gap is closing quickly. Taking the
salary of a general manager as an example,
leading local companies’ average salary is 40%
less than leading companies’ in 2008. In 2010,
the difference was only 10%. Moreover, the
additional long-term or stock incentive is also
the major attraction of local companies to highlevel talents. Currently, 43% of local companies
provide stock incentive while the prevalence
within foreign invested enterprises is only 10%.
For senior management, its responsibilities
are limited to the corporate structure and
culture. Local companies’ fast expansion
and not-yet-solidified structure can offer
high-level managerial talents more decisionmaking power and more room to promote
than a foreign invested enterprise. According
to the Aon Hewitt 2010 Expatriate and
Executive Compensation survey, about 80%
of top executive positions in foreign invested
enterprises are occupied by expatriates.
“Growing with the company” is local
companies’ advantage for employee value
propositions.
Expatriates in Shanghai: The C&B Package
Difference Among Individual Foreigners
Are Widening
For China, 2010 was a year of full throttle
growth. The world is watching China taking
a major role in shaping the global economy.
Many global enterprises learned China is not
just “a” market anymore, but is rather “the”
market. For expatriates in China, 2009 was a
tipping point. From then on, China became
a buyer’s market for foreign talents. In 2010,
we observed this trend clearly. Comparing to
the diminishing economies in the US and in
Europe, the great potential of China itself can
lure talent to work here. The old days when
most employees required cash premiums, rest
and recreational leave and a company car to
come to China are gone. Nowadays, employees
will ask to be sent to China, no matter for
the career advancement, the opportunity to
succeed or the crucial China experience, which
will be the requirements for many future global
executives.
The above does not imply that the China
market does not need expatriates. On the
contrary, the demand is there and high. Many
places and many fields still and will continue to
need foreigners in filling the talent gap. During
this study, nearly 50% of companies will
increase their expatriate headcounts. The main
reason most often cited is business expansion
www.china.ahk.de
in China. Many positions that require extensive
international exposure, high-level management
experience and top-notch technical knowledge
will be often taken by foreigners. According to
our analysis on 78 leading foreign companies,
70% to 80% of their director or top executive
positions are occupied by expatriates, while
40% to 50% of their Senior Manager positions
are taken by expatriates.
The reason for the turn of events is that foreign
talent is increasing, while the demand for them
is not keeping up. Therefore, we can predict
that the lucrative full assignee packages for
everyone will be slowly vanishing. Instead,
the difference among levels and expatriate
categories will be more and more distinct. The
lucrative package will be available, but fewer
portions of employees will be eligible for it.
In this study, many key traditional expatriate
benefits such as housing, transportation,
and children’s education are less apparent in
expatriate C&B policies across the categories.
On the other hand, flexible benefits, usually
as cost control measures, haved gained more
ground.
From an HR management point of view, raising
the efficiency of expatriate management will
be more and more important. This provides
an opportunity for population to grow with
company headcounts. And, unlike before,
global headquarters will not pay for most of
the expenses. In 2010, for 65% of the surveyed
companies, the expatriate cost was absorbed
solely by its China entity. A standardised and
consistent policy on expatriate management
will help streamline the process, maintain the
internal equity and control the cost.
For individual expatriate employees, coming to
China with less benefits is hardly good news.
However, a booming Chinese market will
justify their sacrifice. In 2011, the forecasted
salary increase for China Hired Foreigners is
7.2%, which is much higher than most of their
home country rates and close to China’s 9.1%.
The voluntary turnover rate is 11.4% for China
Hired Foreigners in 2010, a sign for a hot job
market unimaginable in Europe or in the US.
This also reminds our fellow HR professionals
that foreigners may also require a retention
strategy.
Mr. Roger Wu is a Senior Consultant at
Aon Hewitt and is responsible for the Aon
Hewitt Expatriate Survey in China.
* [email protected]
' 021 2306-6928
29
BUSINESS FOCUS
COVER STORY
From West to East and Back:
The Changing Face of Migrant Workers in China
Backbone of China's Economic Growth
The abundant labour force in rural areas
ensured expanding production capacities
with the necessary cheap labour needed for
rapid growth. Typically, migrant workers
come from populous inland provinces with
over 80% originating from Anhui, Jiangxi,
Henan, Hubei, Hunan, Guangxi, Chongqing,
Sichuan, and Guizhou. In contrast, Beijing,
Tianjin, Jiangsu, Shanghai, Zhejiang, Fujian
and Guangdong along the better developed
coastal areas have attracted most of the
cross province migrant workers. Shenzhen’s
population consists almost entirely of migrant
workers, as only a fraction of its citizens
possesses a Shenzhen urban “hukou”. In total,
the migrant population in China is estimated
to be around 230mn, though nobody knows
the exact figures. China’s export powerhouse
Guangdong alone is estimated to employ
about 30mn migrant workers.
For China’s economic development, migrant
workers have been a key resource. Flexible,
they easily move wherever and whenever
they are needed. If business outlooks change,
they simply return to their home towns in
rural areas. Migrant workers are usually
under the age of 30 and have little education
beyond middle school. As a result, they tend
to occupy labour intensive and low skill
jobs.
The Chinese Academy of Social Science
estimates that 70% of the manufacturing
workforces are migrant workers. For the
construction sector, the figure reaches more
than 80%. The jobs are demanding and in
many cases, working conditions can be poor
if not dangerous. The government has taken
steps to improve the situation by introducing
stricter rules and regulations as well as
30
©Ingo Wilhelm
Migrant workers have long been
associated with China’s economic
reforms. Ever since China has opened up
to the world, the booming coastal regions
have attracted more and more foreign
investment, and the rural population has
been flocking to its factories.
providing urban “hukou” status under
certain conditions.
In the past, higher wages attracted the young
rural population. In return, they accepted to
be separated from families and friends for
the opportunity to accumulate savings faster
than they could ever have at home. Eager to
work overtime to receive bonus payments,
workers would accept hardship in order to
send back home as much money as possible.
Living in a crowded dormitory and visiting
home once a year or less, they would plan to
return to their families after having worked
in the coastal regions for a few years. Ideally
then, they would build a house, get married
and build their fortunes back home.
In doing so, migrant workers had a double
function by providing cheap labour and
transferring money from the coastal regions
to the poorer rural areas. In many cases,
however, migrant workers did not only take
on factory jobs but also took on a wide variety
of jobs, forming an important component for
the local economy.
Changing Workforce Post-Crisis
With the economic crisis in 2009, the
flexibility of having a large migrant workforce
seemed once more to be an advantage. With
orders from the US and Europe dwindling,
companies rapidly dismissed workers while
the government urged migrant workers not
to return to the coastal areas after the Chinese
New Year celebrations.
However, the negative impact on the
Chinese economy was less than expected
and by autumn 2009, companies were
struggling to find new staff. By some
estimates, Guangdong was lacking about
900,000 workers in its factories. One year
later, many factories were still struggling.
Whereas positions for low-skilled jobs
were previously easily filled, positions now
stay vacant for some time, which seriously
challenges outputs and business operations.
Companies had to become much more
creative and implemented measures such as
offering rewards to the existing workforce
for each new worker they could attract to the
company. In some cases, HR departments
went to rural villages and attempted to recruit
among the local population.
Minimum wage adjustments were postponed
in 2009 to provide companies with a certain
degree of relief. However, by summer 2010,
many provinces raised the minimum wages.
Most provinces saw an increase of around
20%, though some provinces such as Hainan
stuck out with an increase of 37%. Coastal
areas still have the highest absolute minimum
wages with Shanghai (RMB 1,120), Shenzhen
and Zhejiang (RMB 1,100), Guangdong (RMB
1,030) leading other provinces. Compared
to the provinces which have been the
traditional source of migrant workers, pay is
still between 30-70% higher than in Sichuan,
Fujian or Anhui.
Sichuan, for example, requires a minimum
wage of RMB 850 in Chengdu, while rural areas
require RMB 650. Guangdong’s primary cities
still have a bigger advantage, but the margin to
second tier cities such as Zhuhai, Zhongshan,
Foshan or Dongguan stipulating RMB 920 is
already noticeable smaller. Considering other
factors such as higher living costs in the Pearl
River Delta, travel costs for visits back home,
as well as discrimination toward non-“hukou”
holders for social services, the higher pay in
absolute terms is no longer as attractive as it
has been in the past.
www.china.ahk.de
Major investments in infrastructure by the
government as well as higher costs in coastal
areas have also significantly improved
employment situation further inland. Potential
migrants no longer need to move to regions far
away along the coast, but can find attractive
opportunities within their province as vast
amounts are invested by the government.
Railway and highway extensions, as well
as other infrastructure upgrades have been
on the rise to improve development in
these provinces. Major companies such as
Foxconn have also announced they would
shift production away from the coastal
region to benefit from lower production
costs and better tax incentives. Whereas
workers needed to migrate to find better
paying employment in the past, jobs are now
coming to places closer to their home.
Guangdong has just announced that in order
to lure the migrants back to the area after the
Chinese New Year holidays, it aims to once
more increase the minimum wage in early
2011. Some companies have also upgraded
their working and living environments to
make themselves more attractive. Others
have ceased production in the area to look for
cheaper areas in Western provinces, but also
in Vietnam or Cambodia.
Overall, German companies in China have a
good reputation and are known to provide
good working conditions, fair wages and
career development opportunities. Of course,
hard factors such as salaries will remain
important for filling open positions, but
soft factors and non-monetary incentives
are becoming more and more important.
Conventional approaches and HR practices
cannot cope with the new situation.
Companies need to try new, creative and
alternative ways to successfully attract the
increasingly self-confident fleet of migrant
workers. MZ
The foundation of China’s economic growth – migrant worker on a construction site
Working near home also means being closer
to family and friends, which can significantly
offset earning a few RMB less per month.
Though metropolises like Guangzhou,
Shenzhen, Shanghai or Beijing still have
much to offer, major second tier cities like
Chengdu, Changsha or Xi’an are also rapidly
developing. Hence, the overall attractiveness
of the traditional manufacturing centres
along the coastal areas has suffered.
New Generation of Migrant Workers
Looking for opportunities closer to home
might be more attractive than moving to subdistricts of the major cities along the coast in
which migrant workers get to see little more
than the factory and the dormitory. China’s
workforce today is a different generation
than the post 1980 generation.
Today’s younger workforce is better
educated and expects better pay. Most of all,
they value working and living conditions
higher. Today’s migrant workers may be
less prone to wish to endure the same
factory life which their parents willingly
endured. Statistics show that the proportion
of those who do not desire to return to rural
life is steadily increasing. China’s urban
population has increased more than seven
fold over the last 50 years and is expected to
reach 900mn in 2020 (from 540mn in 2004).
©Ingo Wilhelm
HR departments in traditional destinations
for migrant workers are challenged by the
new situation. Though turnover rates have
long been high, especially for low skilled
workers, positions used to be quickly
filled with new recruits. Competition has
improved the workers’ bargaining situation
and the regional governments have also
been attempting to improve overall working
and living conditions.
31
BUSINESS FOCUS
NORTH CHINA
Green Grass
and Green
Energy
The dairy sector is the biggest industry in the Inner Mongolian capital.
Hohhot capitalises its resources to attract dairy
industries and green energy companies.
Hohhot is located in south central Inner
Mongolia and serves as the capital of that
autonomous region. Ringed by the Daqing
Mountains to the North and Hetao Plateau to
the South, Hohhot’s environment, particularly
its air, is much better than most other major
Chinese cities. During summer, when Beijing is
shrouded by a mixture of acrid smog and fog,
Hohhot has clear blue skies.
Indeed, Hohhot’s Mongolian name, “Xex xot”,
means “Blue City”. And while its Chinese
name is “Hu[1]he[2]hao[4]te[4]” (呼和浩特),
literally “calling for peace Mongolian village”,
Hohhot is also known as the “Qing[1]cheng[2]”
(青城), or “Blue and Green City”. Hohhot is, in
fact, a green metropolis. While much of Inner
Mongolia’s vast grasslands have turned into
desert – Hohhots now endures sandstorms
every spring – the nearby Zhaohe Grassland is
largely intact. Hohhot also has abundant water,
at least compared to most of Western China.
The Yellow River and a number of smaller
rivers flow through or near the city. This
combination of grass and water has made it
the dairy capital of China. It is home to the two
biggest Chinese dairy firms, the state-owned
Yili Group and privately owned Mengniu Milk
Company.
Mengniu, or “Mongolian Cow”, is one
of the biggest Chinese private enterprise
success stories. It was established in 1999 by
disgruntled former high level Yili managers,
who pooled USD 12,600 of their own money to
go head to head with their previous employer.
32
By 2007, Mengniu’s revenues of RMB 936mn
were over twice as high as Yili’s, which
amounted to RMB 439mn.
The company pulled off this coup through
aggressive and shrewd marketing. For example,
by supplying milk to Chinese astronauts
as they prepared for the Shenzhou 5 and 6
space launches, it rode the wave of national
enthusiasm and branded itself as the “special
milk for Chinese astronauts”. Mengniu also
sponsored the Chinese version of “American
Idol,” the “Super Girl” singing competition,
watched by 400mn television viewers. This
visibility significantly boosted yogurt sales in
the important teenage female demographic.
Both Mengniu and Yili were hit hard by the
2008 melamine scandal. After the crisis broke
out, trading of Mengniu’s shares in the Hong
Kong Stock Exchange was suspended for six
days. But the Hohhot dairy industry is now
getting back on its feet – at least enough for the
Swedish sanitary packaging giant, Tetra Pak,
to unveil a EUR 60mn facility in Hohhot last
year. In a 9th July 2009 China Daily story, Tetra
Pak’s President and CEO, Mr. Dennis Jonasson
declared, “China’s dairy industry is recovering
faster than we expected.”
Although Hohhot is famous for its dairies,
which is its biggest industry, the city has a
diversified economy. For example, power sales
from Hohhot’s electrical power plants in 2005
amounted to RMB 13mn (much of that output
is sent to other parts of China); the productive
volume of the dairy sector came to RMB 16mn.
Other key Hohhot industries are electrical
goods and IT, chemicals, pharmaceuticals,
machinery and metals.
Hohhot is also attracting considerable foreign
direct investment, which in 2007 totaled USD
1.3bn. In that year, 229 foreign companies,
including 118 joint ventures, were operating in
the city. Finally, the Trans-Asia Railroad, linking
Hohhot to Frankfurt, has played a key role in
promoting bilateral trade between this region
of China and Mongolia, the Central Asian
Republics, Russia and Europe. In addition to
its dairies and manufacturing activity, Hohhot
is Inner Mongolia’s tourism hot spot. The other
major city in the autonomous region, Batou, is
a bleak steel town set in a semi-arid landscape.
And while northeast Inner Mongolia has better
grasslands, Hohhot is much more accessible
to visitors. Hohhot itself also boasts numerous
attractions, including an excellent museum
and historic neighbourhoods and temples.
According to a 2010 US Department of
Agriculture survey of Inner Mongolia, overseas
tourist arrivals to Hohhot amounted to 81,000
people in 2008, while earnings from domestic
tourism totaled USD 1.5bn.
To preserve its attractiveness to tourists,
Hohhot is pushing green electrical power.
While the city has built coal fired power plants
– Inner Mongolia has China’s second largest
coal reserves after Shanxi – it is also seeking
to harness its abundant wind resources (Inner
Mongolia, including Hohhot, is China’s
windiest region). This year, for example,
the Danish wind energy giant, Vestas Wind
Systems, began Phase II of a major project
in Hohhot to generate wind energy and
manufacture wind turbines.
In recent years, incomes in Hohhot have risen
as fast as those in the more highly developed
Chinese coastal provinces. With its diverse
economic base and pleasant environment,
Hohhot is well placed to be a motor for
economic development in both Inner Mongolia
and the rest of Western China.
Mr. Daniel Garst is a journalist and writes
for several print media.
The Inner Mongolian Museum is one of Hohhot’s most unique
architectural landmarks. Source: Inner Mongolian Museum.
33
BUSINESS FOCUS
EAST CHINA
Kunshan:
The Silicon Valley
of China
Did you know?
• If you own an iPod, iPhone or iPad
touch product, you own something
that was built in Kunshan;
• If you own a laptop computer,
there’s about a one-in-three chance
that it was made in Kunshan;
• Nearly one out of every six cell
phones in the world is built in
Kunshan.
“Every locality is encouraged to learn from Kunshan.”
-- Li Peng, former Premier of China, July 1992
Kunshan is an economic “miracle” no one’s
ever heard of. If Kunshan were in Europe, it
would be one of the ten largest cities on the
continent, but in China it is overlooked because
of its location: sandwiched between two much
larger metropolises, Shanghai and Suzhou.
Kunshan, a city of 1.7mn people 50km from
Shanghai, has emerged from a “town of rice
and fish” only 20 years ago to become the
home of over 4,300 foreign companies from
nearly 60 different countries. In just four years,
Kunshan’s GDP has nearly doubled, outstripping the country’s rise by nearly 50%. Its GDP
per capita now sits 40% above that of Suzhou
and 35% higher than Shanghai’s.
How did Kunshan do it? How did this small
city become a Foreign Direct Investment (FDI)
magnet, winning the award for the strongest
city of its size (amongst a field of 2,000 cities)
five years running?
Kunshan actually benefited from being an “afterthought” to its larger neighbours. Companies looking to locate in Suzhou, for example,
were often neglected by that city unless they
were large multinationals. Many of those small
companies came to Kunshan instead, to a city
that encouraged and nurtured small enterprises. The government of Kunshan developed
a reputation for being clean and smart: clean
due to its integrity in dealing with businesses,
and smart for targeting key industries (namely,
high-tech) and imposing tough environmental
standards for companies moving to or expanding in Kunshan.
China’s “first wave” of foreign investment
came from Hong Kong companies, which
located primarily in Guangzhou due to that
city’s proximity to Hong Kong and its strength
34
as an export base. The Taiwanese were part
of the “second wave” of Chinese investment,
but many Taiwanese companies located in
Kunshan because they were too late to get into
Guangzhou (the price of everything from property to electricity had been driven up by the
Hong Kong companies). Kunshan’s location on
the Yangtze River Delta also gave them a base
not only to export from (through Shanghai’s
ports) but also to access the vast and quickly
rising domestic market.
Over time, companies from all over the world
began locating there, creating a “critical mass”
of companies in many key industries. For a
company in technology or consumer electronics, for example, it was a tough choice not to locate in the city, due to the well-developed base
of suppliers and customers located in and near
the city.
Improved relations between Taiwan (Taiwanese companies up slightly more than half of all
foreign-owned companies in Kunshan) and
mainland China have driven FDI even higher,
and made Kunshan a model for harmonious
cross-Straight relations. In fact, Kunshan looks
and feels more like a Taiwanese city than a Chinese one – the pace of life is hectic, but things
are a little more orderly, clean and efficient than
they are in many large Chinese cities.
And the growth continues. Today, the Kunshan
municipal government is focusing on moving
the city up the value curve from basic manufacturing to greater value-added production.
The city is focusing on five industries for its
next leg of growth: Environmental Technology,
Precision Machinery, Opto-Electronics, Robotics, and Biotech/Pharmaceuticals. Many solar
energy, biotech and other emerging industries
companies have moved to Kunshan or to the
surrounding area in part because of incentives
provided by government and by the area’s
first-rate infrastructure.
If recent changes are any indication, Kunshan’s
growth is in no danger of slowing. In just the
past year, the city became the first stop on the
high-speed rail connection between Shanghai and Nanjing, cutting commuting times
between Kunshan and Shanghai to only 15
minutes. In 2011, America’s prestigious Duke
University will begin classes at a massive 200ac
campus in Kunshan, and the city will open a
large Arts & Culture Centre.
The city also has a unique business culture and
quality of life. Living there, it is easy to forget
that Shanghai is a short 15 minute high-speed
rail ride away: Kunshan is close enough to the
larger cities to feel connected to city life but simultaneously separated from it.
Kunshan has a history of over 2,000 years. It is
well known as the birthplace of Wu opera and
the home of Yangcheng Lake crab. In the next
20 years, the city will undergo more dramatic
– and positive – change. Kunshan will retain
its distinct culture and style, and will continue
serving as a model of sustainable development
and economic progress for the entire country.
It seems likely that in the future, Kunshan will
not be known for its crab and opera, but as the
“Silicon Valley of China”.
Mr. Virgil Adams is an investor who lives in
Kunshan with his wife and three children.
He is the founder of New Frontier Investments
(www.nfichina.com), writes a blog on life in
Kunshan (www.blog.mykunshan.com), and is
helping to organise Kunshan’s first expat club
for westerners.
MEET THE MEMBER
What is your personal and business
background?
I am an MBA by education, and worked
almost all my professional life for two larger,
mid-sized European companies in Senior
Executive positions in Germany, USA,
Singapore, Shanghai.
Tell us a little about your company and
activities in China?
Mr. John Jiang, our CEO, started Lapp Kabel
Shanghai as a Rep. Office in 1999 as Chief
Representative. We converted the Rep. Office
into a Wholly Foreign Owned Enterprise in
2002.
Today, Lapp Kabel Shanghai employs nearly
80 people, mostly in Shanghai, and about
five people each in branch offices Beijing,
Qingdao and Guangzhou. Our strongest
markets are machine tool, automation and
automotive. While these markets are not
yet saturated for us, we focus on growth
markets within our key target industries:
energy, mobility & transportation, life
science. We expect exponential growth from
the segments wind energy, railway and
heavy construction equipment.
What are the main challenges you
encountered operating an international
business in a Chinese environment?
Mainly creating brand awareness. Our
www.china.ahk.de
worldwide recognised brands Ölflex,
Unitronic, Hitronic, Epic, Skintop and
Fleximark symbolise quality, reliability,
and value-for-money. Often, our products
were only suitable for premium markets,
requiring two-fold adjustment: create brand
awareness for upper/mid range markets,
and introduce additional products tailored
to the domestic market; for the premium as
well as for the upper/mid range segment.
What are your short- and long-term
objectives, especially in China?
Short-term as well as long-term: market
growth above industry average, combining
growth with increased market share. Our
biggest consideration for the near future is
whether or not to establish a manufacturing
plant in China. The Lapp Family and the
respective Boards of our companies have
defined China as a long-term future market
and are committed to further investments
here. Our exposure will be the domestic
market in all its facets, not the export
business.
Any top tips for doing business in
China?
Always exercise patience. Let sustainability
guide your decisions, not short-term
thinking.
Frank Imkamp
Company: Lapp Group Asia – Lapp
Holding Asia and Lapp Kabel Shanghai
Job Title/Position: Managing Director
Year of Foundation: Lapp Holding
Asia: 1997 – Lapp Kabel Shanghai: 2000
HQ: Singapore for Asia, Stuttgart as
World HQ
Main Business: Cables (flexible, low
voltage Data-, Power-, Control Cables,
Connectors, Accessories)
Number of Employees: in Asia nearly
500, worldwide approx. 2,800
35
BUSINESS FOCUS
SOUTHWEST CHINA
Chengdu:
Gateway to the West
Since the launch of the “Go-West” Great
Western Development Strategy ten years ago,
Sichuan has emerged as the pacesetter for the
rapid growth of China’s Western region thanks
to its rich resources, its strategic location and
its vast market potential. Covering an area of
480,000km², it is almost as big as France and
has a population of 81.8mn. The average yearly
income is low at RMB 12,600 (2009).
During the international financial
crisis, Sichuan actually
gained momentum.
Wi t h t h e 1 4 . 5 %
g ro w t h o f i t s
gross regional
product in
2009, it was
among the
highest in
China’s
provinces,
and was
almost 5%
above national
average. Sichuan
is the first Western
province to surpass
R M B 1 t n i n re g i o n a l
GDP. Along with its capital city
Chengdu, which has a population of 10.3mn
(2009), it will become increasingly important
for investments and sales.
As a production location, Chengdu ranks
fourth after Hangzhou, Guangzhou and
Ningbo, according to a survey undertaken
by the China Research Centre of A.T. Kerney
in 2010.
Due to its inland location, Chengdu’s level
of development still lags behind the coastal
areas. However, it hasn’t reached their level of
saturation. Many international companies have
started looking to the West as the new frontier,
and have chosen Chengdu as the next point of
conquest.
Chengdu is already home to 133 Fortune 500
companies, including Allianz, Bayer, Lafarge,
Metro, Nokia, Siemens, and ThyssenKrupp.
During January to June 2010, Chengdu
approved 139 foreign invested projects, a 61.6%
growth compared to the same period last year.
36
The actual utilised foreign investment was USD
2.04bn (40.9% growth from 2009), ranking first
among cities in West China. GCC • South &
Southwest China currently lists about seventy
enterprises with German capital. They are
involved in machinery (45%), electronics (11%),
automotive industry (9%) and chemicals (7%).
Among them, joint ventures are more frequent
than Wholly Foreign Owned Enterprises
(WFOE).
Preferential policies by the local and central
government, and relatively low labour costs
in Sichuan also attract foreign investors. In
the first half of 2010, an unskilled worker in
Chengdu received a monthly average of USD
150. In the surrounding provinces it was even
less at USD 120.
Government incentives apply until 2020
to “Advantages Industries” of the “GoWest” Implementation Guide. This includes
the automotive, chemical, electronics and
IT, infrastructure projects, pharmaceutical,
m a c h i n e r y, re n e w a b l e e n e rg i e s a n d
e n v i ro n m e n t a l p ro t e c t i o n m e a s u re s ,
telecommunication, and water management
and conservation industries.
In the first 2-3 years after starting a new
business built on foreign capital, tax
exemptions can be granted to a 15% corporate
tax (usually 25%). Import tax is reduced or
exempted on the import of plants. Mining
rights can be purchased with 100% reduction in
the first year and 50% in the second year, and
similar policies are applicable for investments
in infrastructure and environmental protection.
But where should you locate your business?
Chengdu is constructing industry-specific
regions in the outskirts of the city that are
designed to meet the needs of companies.
Among them, the Chengdu Hi-Tech Zone
ranked as the economic zone with the best
investment potential just behind Tianjin
Binhai and Shanghai Zhangjiang in the “2010
Evaluation Report on Investment Potential
of Economic Zones” of the 14 th China
International Investment Trade Fair in Xiamen.
The local governments helps identify the
right industry zones for companies. Once set
up, businesses have direct access to decision
makers through quarterly meetings with
the Chengdu Mayor. Laws and policies are
promptly translated.
Chengdu’s landlocked location is
advantageous to access the Western regions.
Countless reforms continue to transform it into
a key logistic hub. The city’s road and railway
capacity has significantly increased and the
first subway line opened in September 2010. A
brand new high-speed railway links Chengdu
to Chongqing in two hours, which will be
upgraded to one hour within the nationwide
high-speed network by 2020. As for air cargo,
the capacity will improve with both a second
runway at the current airport and a new airport
east of the city centre.
According to representatives of GCC • South
& Southwest China, most German companies
picked Chengdu for lower transportation
costs and time, rather than for lower labour
costs. Chengdu is a classic second-tier city
with increasing market segmentation, which
is likely to enable a differentiated handling of
the market. With rising prices and saturated
markets in the east coast, it may be worthwhile
for companies to set their eyes on Sichuan and
Chengdu for strategic expansion. AS
www.china.ahk.de
MEET THE MEMBER
What is your personal and business background?
I am a chartered insurer of the Chartered
Insurance Institute (UK) and an associate of the
Chartered Institute of Arbitrators (UK) with over
35 years of experience in insurance business. I
joined AXA General Insurance as China CEO
and General Manager of Winterthur (Asia)
Ltd. Shanghai Branch in 2007. Prior to joining
AXA Group, I held various senior management
positions with several multinational insurance
companies in China, Taiwan and Hong Kong.
Tell us a little about your company and activities
in China?
Winterthur Insurance (Asia) Ltd. Shanghai Branch
is 100% owned by AXA China. The branch offers
a broad range of P&C insurance products. This
includes property, marine cargo & pleasure craft,
engineering, liability and retail insurance covering
personal accidents, travel, home & family and
golfing, as well as high-end individual and group
health insurance to both commercial and personal
customers, targeting small to large corporate risks.
How long has your company been active in
china? Have there been any major shifts in
strategy in that time and why?
Winterthur entered China in 1997 as the first
licenced European P&C insurer in the market.
Since the acquisition by AXA Group in 2007, the
Branch’s strategy has been changed to embark
on the expansion of business in retail and health
segments. In addition,
we are strengthening
the business
development in the
large corporate risk
segment, and building
a unique platform for
AXA’s international
clients’ businesses in
China.
Raymond Chan
What are your
competitive selling
Company: Winterthur Insurance (Asia) Ltd. Shanghai Branch |
points and what
AXA General Insurance China Ltd.
kind of benefits can
Job Title/Position: General Manager | CEO
companies using your
services in China get?
Our most significant advantage is our brand. AXA
has firmly weathered the recent global financial by our international insurance franchise, including
crisis and continues to stand strong in fulfilling AXA Corporate Solutions, AXA Assistance and
our commitments to customers, shareholders, AXA-Matrix Risk Consultants in China.
distributors and suppliers. Our recent
performance stand as a testament to our Group’s What are your aims and hopes for the future?
continued focus on managing and controlling risk RC: We aim to achieve a higher than market
across our business. As a reflection of the strength growth and profitability in our Shanghai Branch
of the Group, AXA continues to remain one of the in the next three years. Our ambition is to develop
few AA rated insurers in the world.
a long-term presence in China through inorganic
Building on the platform of our local P&C growth by using the Branch as a foothold for a
b u s i n e s s , o u r l o c a l c u s t o m e r s c a n e n j o y bigger move.
professional technical services on special risks,
global emergency assistance (for PA and Travel)
and loss prevention engineering services provided
37

Part 1 - AHK Greater China

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