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CHINA IN SPOTLIGHT
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AseanAffairs Magazine November - December 2010
CONTENT • ASEAN TRADE
ASEAN AVIATION • ASEAN TRAVELLER
• ASEAN ENVIRONMENT

• BEYOND ASEAN 

• ASEAN MONEY  INSIDE OUT
• ASEAN TALK • CHINA IN SPOTLIGHT

China in Spotlight
The emerging role of China in the 21st century is a focal point for conjecture and a certain degree of apprehension in the world outside of China. Is China an ally, a competitor, an adversary or perhaps all three?

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  SUCCESSFUL STRATEGIES IN CHINA
Eight business leaders discuss the strategy for foreign firms to enter the Chinese market and what it takes to be successful.

CARLA CICO
CEO
Rivoli S.P.A. Italy
CHARLES TANG
President
Binacional da Camara de Comercio & Industria
Brazil - China
TARIQ AHMED NIZAMI
Cheif Executive Officer
Founder, CEO Clubs UAE
DAN BRUTTO
President
UPS International , USA.
CHEN HONG
Chairman and CEO
The Hina Group , China
MICHAEL BARBALAS
President
Goodrich , China
THOMAS HOMBERG
Corporate Vice President
EADS
JENNIFER ANGENEND
Director and Co-Owner
WaterFilled Barrier
Systems,USA.
Caria Cico is presently CEO of Rivoli Group S.p.A., a leading Italian company in civil infastructure, present in South America,Africa and Eastern Europe.Born in Verona,Italy,she earned her MBA at London Business School. Charies A.Tang is chairman of the Brazil-China Chamber of Commerce and Industry .he is also a member of the Fernand Braudel Institute of World Economics in Sao Paulo and the Co-Founder of the Research and Study institute for Economic Development. As Chief Executive Officer of COE Clubs UAE, Tariq Ahmed Nizami heads a holding company which has interests in real estate, gold and diamonds, oil, trading, travel, entertainment, media, hospitality, security, food, manufacturing, medical, shipping, education and information technology. As president of UPS International, Dan Brutto is responsible for all UPS international package, freight forwarding and logistics businesses, as well as U.S. international package services. He is also a member of UPS’s Management Committee, which is responsible for the day-to-day management of the company. Dr. Hong Chen is the Founder, Chairman and CEO of The Hina Group. With more than 60 professionals in Beijing, Shanghai, Singapore and the Silicon Valley, the Hina Group has become one of the most reputable investment banking and private equity firms in China Michael Barbalas is currently president for Goodrich China. Goodrich is a US Fortune 500 company in the aerospace industry. Previously he served as the President of the American Chamber of Commerce in China, with more than 1,200 member companies. Thomas Homberg is Corporate Vice President and Head of Strategic Coordination at EADS, driving the development of EADS Group Strategy. Before joining EADS, he served 18 years in the German Armed Forces as a paratrooper and general staff officer Jennifer Angenend is director and coowner of WaterFilled Barrier Systems, Inc. based out of Texas. Joining the company over 5 years ago, she has been integral in the expansion of their business and product lines. She is also involved in other companies and entrepreneurial business ventures in other industries.

 With a population of more than 1.3 billion, China is the world’s largest market and sends out a siren song beckoning companies worldwide to enter its market. But the Chinese market in line with other countries with extensive land mass, is not homogenous, there is great diversity between regions and provinces. The question remains what is the best and most cost-effective way to enter the Chinese market? 

(L-R) Jeffrey Chen, Chairman/CEO, NeoPac Lighting Group, CARLA CICO, CE0, Rivoli S.P. A. Italy, Liang Xinjun, Vice Chairman and Chief Executive Officer, Fosun Group, China, Frank-Jürgen Richter, President, Horasis, Switzerland, Nan Cunhui, Chairman, Chint Group, China, John Tan, Chief Executive Officer, Asia Capital Reinsurance Group, Singapore and Patrick O’Basuyi, Chairman, Obax Group, USA speaking at the Plenary Session: Envisioning the Post Crisis World Economy during the Global China Business Meeting 2010 in Luxembou

           Asean Affairs invited a group of eight executives to share their experiences and insights on doing business in China. Panel members were: Jennifer Angenend of Water Filled Barrier Systems; Michael Barbalas, currently president of Goodrich China and former president of the American Chamber of Commerce in China; Daniel Brutto is president, UPS International; Dr. Hong Chen is the founder, chairman and CEO of The Hina Group; Carla Cico, CEO of Rivoli Group S.p.A., a leading international Italian company in civil infrastructure; Thomas Homburg, corporate vice president and head of strategic coordination at EADS; Tariq Nizami, CEO and founder, CEO Clubs, United Arab Emirates and Charles Tang, president of the binational Camara de Comercio and Industry Brazil-China.

 Q: What is the best way for entrepreneurs and companies to learn about China before entering the Chinese market?

Angenend: “From the perspective of an entrepreneur who has expanded into new regions and marketplaces, the best way to learn about any market before entry is by comprehensive study and research; this not only includes understanding laws and economic trends but also cultural customs and the external environment of business in the region of interest. Being the extremely attractive emerging marketplace that it is, there is a wealth of information available to those seeking opportunity in China. Additionally, and perhaps more importantly, seeking insight and information from those who are intimately familiar with China and have lived, worked and found success there can be an invaluable tool and provide an extremely beneficial perspective.”

Cico: “To talk with people that have already had the experience. It is important to talk with as many people as possible, because each case has its own reality and to have a broader understanding can help you to have a better overview of the real situation. A due diligence process is very important in order to try to limit future major problems. China is not easier or more difficult than any other new market, but because of the competition both international and local now days it takes more in term of resources to open a market there.
One of the major problems is to find good and reliable persons, with experience and understanding of the local mentality, if they are foreign, or of the international mentality, if they are local.” Nizami: “I have been doing business with China for the last 6 years but before any or first business I had to visit for more than a year to learn and understand the local market. China has to be studied very carefully in any industry before moving into the market as China is a very different local market because of their consumption patterns, spending habits and most of all culture. In doing business with China you are never late because the market is so big. I always say that China is like a big ocean and there are fish for everyone, it depends on if you are prepared to catch the most from the market.”

Brutto: “Research is essential before entering any market, and China is no exception. A vast, complex nation, China is anything but a homogenous market. The world’s most populous nation is a rich mixture of languages, cultures and ethnicities. Economic development and average per-capita income varies by province and by city. Therefore, it is essential to gather specific, local information from reliable sources about a broad range of topics, including local business life and government regulations for foreign companies.Above all, entrepreneurs and businesses need to look at their own strengths and resources, know what they can do best, and have a clear vision for what they want to achieve in China. As China is a vast market with very different characteristics, China is not right for every company.”

Chen:
“China is a very dynamic, vast, and complicated society. The ways the businesses are conducted are quite different from the rest of the world where a lot of legal systems are being improved. Before getting into China, it is best to find someone or firm who knows China very well, and recruit such a person as either consultants or doing a field study on the relevant industry. You can also talk to the Chamber of Commerce of your country in China, and seek their help. Of course, going to various conferences or events related to China would also be a good thing to do.”

Q: An often-overlooked issue for companies to consider is intellectual property protection. China’s software piracy rate has been reported as high as 92 percent. What’s your view on this issue?

Angenend: ”For some industries, the state of intellectual property protection may not matter as much; however, for many industries it certainly serves as a deterrent to entry into this marketplace. Before entering the Chinese market, it is essential that an entrepreneur or company realistically visit this IP protection and enforcement issue, understand if and how it could impact their success, and formulate a dynamic plan along with strategies for actively addressing it. For some, this may mean fundamentally altering the way they do business relative to other regions. We are all moving forward into a more global marketplace, and I believe that there are always solutions to any challenges or problems that may arise; awareness of these potential challenges is key to ensuring potential success in this or any other business climate.”

Barbalas: “China has been putting in place the legal system needed to protect intellectual property including patents, trademarks and copyrights. It is important for new companies coming in to use the legal system to protect their intellectual property in the same way and to the same extent they would do in their own home market. Beyond this, business associations from both the US and Europe continue to highlight intellectual property protection as one of the top 10 issues for companies doing business in China. Within your own company there are many practical steps you can take to protect your intellectual property while you build your business in China.”

S Roy, Founder & CEO, Asean Affairs, (Centre), chairing the session with Daniel J. Brutto, President, UPS International (R) and Alan Hassenfeld, Chairman of the Executive Committee, Hasbro (L) at Horasis Annual Meeting January 2010, Zurich, Switzerland

Brutto: “China’s software piracy rate has decreased to 79 percent .”

Chen: “Depending on the industry, things have changed quite a bit, and Chinese government start to get tough on piracy. For instance, a few years ago, a lot of TV videos could be downloaded for free, and each episode was sold for 2000 RMB on line. Now, companies who bought the legal rights of the TV series, such as Sohu, are suing those who pirated it. Thus, each episode now is sold for 20,000 RMB online. So things are improving quite a bit. An advice to foreign companies is that they should treat the Chinese market differently than European countries or US, where the GDP per capita is many times higher than that of China. They should lower the price of the software for China market. As China is huge, they can then sell more copies and actually get more revenue and profit. Autodesk did this, and is very successful.”

Homberg: “For every company, IP protection and technology transfer are of the highest importance everywhere in the world. Consequently, it is encouraging to see that the Chinese government continues to improve intellectual property protection. This is essential for China’s industry in order for it to be a reliable business partner, and to engender trust between investors and Chinese companies.”

Barbalas: “China has been putting in place the legal system needed to protect intellectual property including patents, trademarks and copyrights. It is important for new companies coming in to use the legal system to protect their intellectual property in the same way and to the same extent they would do in their own home market. Beyond this, business associations from both the US and Europe continue to highlight intellectual property protection as one of the top 10 issues for companies doing business in China. Within your own company there are many practical steps you can take to protect your intellectual property while you build your business in China.” Brutto: “China’s software piracy rate has decreased to 79 percent .”

Chen: “Depending on the industry, things have changed quite a bit, and Chinese government start to get tough on piracy. For instance, a few years ago, a lot of TV videos are can be downloaded for free, and each episode will be sold for 2000 RMB on line. Now, companies who bought the legal rights of the TV series, such as Sohu, are suing those who pirated it. Thus, each episode now is sold for 20,000 RMB online. So things are improving quite a bit. An advice to foreign companies is that they should treat the Chinese market differently than European countries or US, where the GDP per capita is many times higher than that of China. They should lower the price of the software for China market. As China is huge, they can then sell more copies and actually get more revenue and profit. Autodesk did this, and is very successful.”

Homberg: “For every company, IP protection and technology transfer are of the highest importance everywhere in the world. Consequently, it is encouraging to see that the Chinese government continues to improve intellectual property protection. This is essential for China’s industry in order for it to be a reliable business partner, and to engender trust between investors and Chinese companies.” ..........................

 

  

  


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