Bauma China 5-8 November 2002 Shanghai, China CEA British Information Stand Report 1. Introduction.
The CEA (Construction Equipment Association) applied for SESA (Support for Exhibitions and Seminars Abroad) funding for Bauma China (5-8 November 2002, Shanghai, China) in the 2002/2003 bidding round but were unsuccessful in securing TPUK (Trade Partners UK) funding. This was held to be due to SESA grant aid not being available for the first edition of an exhibition. This decision was particularly disappointing, as significant financial support had been awarded to exhibitors from the Governments of Germany, Spain, Italy and Finland. However, as CEA members had identified China as potentially the most important global emerging market for construction equipment, it was considered critical to have a British presence at the show. The CEA therefore decided to take an information stand at Bauma China. Although no funding was available to British exhibitors under the SESA scheme the CEA’s sponsoring department – the Automotive Directorate - at the DTI (Department of Trade and Industry), recognising the importance of the market, agreed to provide matching funding for the cost of the CEA’s information stand and travel for the CEA’s Exhibitions Manager, Joanna Oliver. The CEA is indebted to Alan Woods at the Automotive Directorate for facilitating this funding and making the information stand possible. Alan attended the exhibition to make an assessment of the market and potential for British exhibitors at the next edition of Bauma China in 2004. In addition to the CEA information stand three British companies exhibited at Bauma China in their own right:– BSP International Foundations Ltd, Off Highway Research, and Universal Augers Ltd. JCB Ltd and International Transmissions Ltd were present with local representatives. A full list of Bauma China exhibitors can be found on the web site – www.bauma-china.com. 1.1 The information stand also provided an opportunity for a further 8 British companies to display literature and graphics. These companies were: Britax (PMG) Ltd Henry Cooch & Son Ltd Holmbury Ltd Integrated Hydraulics KHL Group Niftylift Ltd Resale Weekly Sterling SPP
1.2 CEA took enquiries and trade leads from visitors to the information stand – a listing of visitors has been sent to display package participants. Most of the companies used this display facility to assess the market potential for their product and acquaint themselves with domestic competitors. Some were looking for distributors, agents or joint ventures in China. Those who already had a distributor used the facility to raise awareness of their product. Five display package participants visited the show and used the stand as a base for their British personnel to meet potential customers. 1.3 The CEA information stand was co-located with that of CECE (the Committee for European Construction Equipment) and the facilities were shared. Joanna Oliver organized the stand on behalf of CECE. Ralf Wezel, CECE Secretary General, was present throughout the show to explain the work of CECE and its relationship with the Commission of the European Union. Visitors were particularly interested in CECE’s work on technical and statistical projects. Display space was provided for CECE and its national associations.
1.4 The CEA stand was located opposite the International Magazine Distribution Stand and we were able to ensure that British titles always filled the shelves. 1.5 The CEA stand was staffed by Joanna Oliver assisted by a local interpreter who both spoke and wrote English. An interpreter was essential as very few visitors spoke any English at all – especially the older visitors – although many had their business cards translated into English. 1.6 The CEA produced a British at Bauma China catalogue detailing British exhibitor and display company product and contact details in both English and Chinese. 1.7 200 copies of the CEA’s Business Tracker 2002 interactive CD-ROM listing British equipment manufacturers, industry information and statistics were distributed to visitors at the show.
2. The Exhibition.
2.1 Venue
Bauma China was held at the Shanghai New International Expo Centre (SNIEC) in Pudong – about 20 minutes by road or metro from the city centre. Pudong is the newest part of Shanghai, located to the south and east of the city centre. Pudong has risen from paddy fields over the last ten years to be a modern city dotted with skyscrapers competing with the skylines of Dubai and Singapore. The Jin Mao Tower – the world’s 3rd highest skyscraper and China’s tallest building is situated in the centre of Pudong. The modern international airport is located in Pudong approx. 44 kilometers from the city centre and 25 kilometers from the exhibition centre. From the end of October 2002 all international flights arrive and depart from Pudong, with Hong Qiao airport to the west of the city serving domestic flights. SNIEC was built as a joint co-operation between the Shanghai Land Development (Holding) Company and the fair authorities of Munich, Dusseldorf and Hanover and is the most modern exhibition centre in China, comparing favorably with any in the west. Presently the centre comprises of 4 halls with a gross area of 45,000sqm and 20,000sqm of outdoor exhibition space. Once completed, it will have a total of 17 halls with 200,000sqm of space and 50,000sqm of outdoor exhibition space. The International Pavilions of Germany, France, Italy, Spain, Finland and Korea were located in Hall 3 with Hall 2 being predominantly Chinese and German exhibitors. The major OEM’s including Caterpillar, JCB, Hitachi, Volvo, Liebherr, Case, Hyundai, etc. exhibited outside. The exhibition centre provides and exhibitor’s shop and 3 restaurants serving Chinese and western food. Chinese lunch boxes were available and seemd popular with exhibitors. A VIP lounge was made available to international group organisers. Shanghai is the economic and commercial centre of China and a popular city for exhibitions. Further exhibition centres are planned and with it’s excellent infrastructure of roads and public transport it is is an easy city in which to stage an exhibition. The Greater Shanghai Area (GSA) is a key region for foreign companies looking to invest and do business in China: It accounts for 30% of China's gross domestic product. With annual growth of 10.5% (1999 -2000), its gross domestic product is 2% higher than the national average. The construction machinery and building material machines industries are concentrated in the GSA. The region plays a key role in the Chinese market (Source IMAG).
2.2 Organisers
Organisers Messe München GmbH - Munich International Trade Fairs IMAG - International Exhibition and Fair Service Ltd. SNIEC - Shanghai New International Expo Centre Co-Organisers: CCPIT - Sub-Council Construction Machinery CNCMC - China National Construction Machinery Corporation CCMA - China Construction Machinery Association International partners: VDMA - German Engineering Federation, Construction Equipment and Building Material Machine Association CECE - European Committee for Construction Equipment Supporters: China Machinery Industry Federation China Construction Machinery Association China Building Material Construction Society China Machinery Industry Federation China Road Transport Association Construction and Maintenance Machinery Branch State Electricity Corporation China Huadian Engineering Corporation China National New Building Material Group Corporation China Railway Construction General Corporation China Railway Engineering General Corporation Jianghe Mechanical & Electrical Equipment Engineering Co., Ltd. International Road Federation National Ready Mixed Concrete Association National Stone, Sand & Gravel Association National Utility Contractors Association Society of Automotive Engineers Bauma China is represented in the UK by Pattern Ltd who are agents for all of the Munich global trade fairs. The CEA has a long-standing relationship with Pattern’s Managing Director, Roger Sherman, and will work with Roger to ensure a larger British presence at the next edition of Bauma China in 2004.
2.3 Stand Contractors
The CEA stand was built by the organiser’s recommended contractors, SYMA, using an adapted shell scheme. The shell scheme comprised: stand walls and name fascia in white, spot lighting, grey carpet, 1 - 220v. Electricity point – 3 pin fitting suitable for UK plugs, table and chairs and a wastepaper basket. Extra furniture was available from the stand builders at reasonable prices (by exhibition standards). Although the name fascias were wrongly spelled on arrival they were changed in time for the opening of the show.
2.4 Freight Forwarders
The CEA recommended freight forwarders were ExpoFreight Logistics Management. The project was managed by Wayne Forster who was able to arrange favorable consolidated rates for British exhibitors and the display package participants. The freight arrived in Shanghai and was delivered to the organiser’s nominated forwarder – Shenkers – on 2nd November. However, problems with customs delayed delivery to the stand until 15.00 on the day before the show opening. Fortunately this did not present too much of a problem for exhibitors and stands were ready by the 18.00 deadline.
2.5 Other Exhibitors
There were 457 exhibitors from 19 countries at Bauma China. Exhibitors were predominantly from China and Germany although national pavilions were present from; Italy, Spain, France, Finland, South Korea and the UK. Individual exhibitors were present from; Australia, Austria, Brazil, Denmark, Hong Kong, Japan, Malaysia, Holland, Russia, Singapore, Switzerland and the USA. This made Bauma China the largest exhibition for construction equipment ever to have been held in China. The stand construction of the national pavilions was of a high standard with strong national branding – highlighting the large amounts of financial support injected into Bauma China by the national governments. The national pavilions had all produced glossy, full colour brochures translated into English and Chinese. This all left the British looking rather like the poor relations – however, our visitor levels appeared to be as high, if not better, than some of the more formidable national pavilions. Most of the smaller domestic exhibitors went with the basic organiser’s shell scheme and few exhibited product – preferring the Chinese trend of displaying graphics and literature only. Domestic exhibitors were predominantly OEM’s including Sany Heavy Industries Limited, Guangxi Liugong Group Co. Ltd, Shandong Engineering Group, Xiamen Engineering Machinery, Xuanhua Construction Machinery Group and Xuzhou Construction Machinery Group Inc. – all major players in the domestic market. There is a huge and fast growing demand in China for construction equipment, especially for road making equipment with demand more than doubling since 1996. For example a staggering 30,430 wheeled loaders were sold in China in 2001 making it the largest market in the world. Over 130 domestic manufacturers of wheeled loaders have been identified (Source Off Highway Research). Many of these companies are looking for components from outside China, joint ventures and technical co-operations. All the major global OEM’s were present and had put considerable resources into their stands, particularly Volvo, Hitachi, Caterpillar and Liebherr. Many of these OEM’s are now manufacturing in China – further details in section 8 of this report. Technical specifications of products on display can be found on the Bauma China web site – www.bauma-china.com and are located in the media section of the site. A full list of exhibitors is also available on the site.
2.6 Visitors
The exhibition’s opening hours were 09.00-17.00 for the first 3 days of the show and 09.00 – 15.00 on the final day. The first day of the show was the busiest – more enquiries were taken on the CEA stand in the first day than in the whole of Conexpo 2002. The second day was almost as busy. However, by the last day the show was very quiet. This gave exhibitors a chance to visit each other’s stands - an important part of any exhibition. The official visitor figures were over 30,000 visitors from 6 continents and 58 countries. Visitors were predominantly from China with the ASEAN region, Korea and Japan being well represented. The standard of visitors was generally high and well informed with many coming from OEM’s looking to source components. A number of visitors were seeking overseas companies with whom to form joint ventures. The visitor quality was higher than expected with less than the usual quota of general “import exporters”. It was essential to have an interpreter as few visitors spoke any English at all. It is also very important to have company information translated professionally into Chinese by a translator who has technical knowledge of the construction equipment industry to ensure correct translations of industry terms and vocabulary. The Chinese seem to have an insatiable quest to improve their knowledge of technology and many came armed with cameras. Given ongoing difficulties with intellectual property issues, many manufacturers were naturally reticent to allow detailed photographs and videos to be taken of their products on display. Any free gifts on stands were eagerly collected and large queues formed at the bigger stands. British flag badges were given to visitors to the British information stand and were well received.
3. British Embassy and Trade Partners UK.
Bob Shead, Consul Commercial, from the British Consulate General in Shanghai visited to the show on the opening day. Bob is keen to help British companies looking to start exporting to China and is able to give advice on forming alliances and joint ventures with Chinese partners. His department can provide a range of market overviews, reports and tailored market information. However, detailed market research will incur a cost. Copies of general sector reports are appended to this report. Mr R Shead British Consulate General Suite 301, Shanghai Centre 1376 Nanjing XiLu Shanghai 200040 China Phone: +86 21 6279 7650 Fax: +86 21 6279 7388 Mobile: +86 13701 777475 e-mail: bob.shead@fco.gov.uk Web site: www.britishconsulate.sh.cn The British Embassy is located in Beijing 11 Guanghua Lu Jianguomenwai Beijing 100600 China Phone: +86 10 65321961 / 65326895/6/7 Fax: +86 10 65321937 e-mail: commercial@peking.mail.fco.gov.uk Web site: www.britishembassy.org.cn Trade Partners UK provide a useful web site – www.tradepartners.gov.uk offering multi-sector worldwide market, links and contacts. Specific China contacts at Trade Partners UK are as follows:-
Trade Partners UK - China Unit e-mail michelle.miller@tradepartners.gov.uk Phone: 020 7215 4230/4827 Fax: 020 7215 8797
The China-Britain Business Council (CBBC) is the Area Advisory Group for China for Trade Partners UK. It is a non-profit body funded through Trade Partners UK and industry, promoting UK business with China. Business Advisors are employed by the China-Britain Business Council and offer free consultation and advice on trading with China. e-mail: cbbc.enquiries@cbbc.org Phone: 020 7828 5177 Fax: 020 7630 5780 Ben Pape – Business Advisor for Building Material and Construction. e-mail: ben.pape.dti.kgh@gtnet.gov.uk Phone: 01962 711 137 Fax: 01962 711 139 Mobile: 07980 865513
4. DTI – Automotive Unit.
The CEA’s sponsoring department, the Automotive Unit, at the DTI (Department of Trade and Industry) made the CEA’s participation at Bauma China possible by offering matching funding for the cost of the information stand and travel expenses for Joanna Oliver. Without their support the cost of the stand would have been prohibitive for the CEA and an invaluable opportunity of promoting British construction equipment in this critical market would have been lost. The Automotive Directorate’s Alan Woods visited Bauma China for four days. During this time he toured the exhibition, meeting key players in the industry and identifying opportunities – and noting the substantial national pavilions supported by other foreign governments. Alan also spent much time on the CEA stand assessing the potential and quality of visitors. The presence of a British Government official underlined the commitment of the British manufacturers to establish relationships in the market. The CEA will work closely with the Automotive Directorate to make all efforts to secure SESA funding for Bauma China 2004 – to help level the playing field with our European competitors. Alan Woods Automotive Unit 151 Buckingham Palace Road London SW1W 9SS Phone: 020 7215 1187 Fax: 020 215 1557 e-mail: alan.t.woods@dti.gsi.gov.uk
5. China Geographical.
Area: 3,750,000 square miles. The greater part of the country is mountainous. The notable exception is the great China plain, triangular in shape with its apex near Beijing and its base along the Yangtze River between Yichang and Shanghai. The Yellow River and the Yangzte River roughly divide the country into north, central and southern China. China shares a border with many Asian countries, notably Vietnam, North Korea and India. Land transport across these borders is restricted. Tibet and Taiwan are considered to be part of China and should not be considered otherwise when dealing with Chinese companies and officials. Population: The population of China is 1.29533 billion, including Hong Kong - 6.78 million, Macao - 0.44 million, & Taiwan - 22.28 million. The birth rate in 2001 was 6.95 per thousand. The rural population is 0.80739 billion, which accounts for 63.91% of the total population, though part of this is also engaged in rural industrial activity rather than farming. Recent years have seen a significant migration of the rural population as more people search for work in the cities, a result of huge growth in construction and the related disappearance of arable land. The urban population is 0.45594 billion, which accounts for 36.09% of the total population. The official population of Beijing is now 13.819 million, and other major centers such as Shanghai, Guangzhou and Wuhan are fast approaching this figure. 91% of the population are Han Chinese. There are many other ethnic groups, particularly in western and southern China and the border regions (Source State Statistics Bureau of the People's Republic of China).
6. The Chinese Government and Market.
A vast geographical area with around one fifth of the world’s population, China is undergoing complex political changes. Although still a one party communist state deriving its political philosophies from Marx, Lenin and Mao, former party chief Jiang Zemin has paved the way for foreign investment and strengthening of the private sector during his 13 year tenure, which ended at the close of the Chinese Communist Parties 16 th Congress in November 2002. He will take with him 5 members of the ruling elite Politburo Standing Committee - leaving the way open for further reforms. Prime Minister Zhu Rongji and party number two, veteran hardliner Li Peng, are also stepping down from their posts.
Vice President Hu Jintao has been elected in his place as party chairman. Mr Jiang remains in control of the armed forces as Chairman of the Military Affairs Commission. Mr Jiang will almost certainly retain much of his power within the party and become the power behind the throne of the new administration. Five of his close allies have been elected to the Politburo Standing Committee. They are:- Zeng Qinghong, adviser, Jia Qingling, life-long friend, Huang Ju, loyal acolyte, Li Changchun, promoted by Mr Jiang Wu Guanzheng, longterm ally (Source BBC World Service web site 15/11/02). The 16th Congress has approved the inclusion of Jiang's so-called "Three Represents" theory into the party's constitution. The move is being seen as a formalization of Jiang's legacy as leader, incorporating once unthinkable capitalist ideology into a party seeking to make itself relevant to the needs of a fast growing country. 'THE THREE REPRESENTS' Theory first raised by President Jiang Zemin in early 2000. Communist party must: 1 - Represent most advanced productive forces, including private business. 2 - Represent the most advanced culture. 3 - Represent fundamental interests of the broad masses (i.e. not merely a "revolutionary party" but one that stands for all Chinese.) It is also likely that there will be greater number of representatives, from Shanghai on the new Politburo – recognising the regions importance as a driving force to secure economic reform. The new Politburo is likely to be stacked with allies of Mr Jiang. Mr Jiang’s successor, Mr Hu, was not his choice but promoted, with a view to succession by the late President Deng Xiaoping. As party chief in Tibet he introduced martial law in 1989 and organised the brutal suppression of anti-Chinese attitudes. His speeches give warning of the dangers of ideological deviation and western ideology. For the first time a sprinkling of private businessmen were included in the 2,100 delegates to the 16th Congress. It is possible that one or two will make it onto the new Central Committee. Mr Hu, however, is no liberal (Source The Economist 8/11/02). Report from CNN.com 14/11/02 - While discussing with Congress delegates from Shanghai, Jiang noted that the Shanghai region would continue to be the "dragon head" for the entire economy. The president said Shanghai would become a model "international metropolis [under the conditions of] socialist modernization," as well as a global economic, finance, trade and transportation hub. Jiang added that Shanghai, Jiangsu, Zhejiang and surrounding areas would continue to benefit from "special" policies to enable them to maintain a growth rate slightly higher than the national average. In his congress speech, Jiang said the party's major goal for the entire nation to achieve the status of a "relatively well-off society" by the year 2020. However, it is understood Beijing hopes the greater Shanghai region could in 20 years time approach the economic standards of First World countries and cities. Political analysts in Beijing said cadres and residents from central and western provinces shared the common perception that Shanghai had in the past 10 years benefited from special policies thanks to the so-called Shanghai Faction's stranglehold on the Politburo and other top governing organs. The analysts said there were expectations that Vice-President Hu and Vice-Premier Wen Jiabao, who are tipped to become respectively party general secretary and premier at or soon after the Congress, might be able to redress the balance. Hu spent 21 years in three poor western provinces and Wen worked in impoverished Gansu Province for 12 years. Major concerns for the ruling party include the rising gap between rich and poor and city and countryside and the inherent corruption found in much of the system of state owned enterprises. There is also little support for the party in the new private businesses. In 2000 80% of private businesses had no party members – all state owned businesses have not only members but also party cells. Power is shifting in the villages from grassroots party control to officials directly elected by villagers (Source The Economist 8/11/02). China has just lifted a ban on the transfer of state owned and corporate shares of listed firms to investors from overseas so long as foreign investment is allowed in those sectors. This money will prove indispensable as China struggles to streamline inefficient state industries. China is now openly inviting foreign investors in banks, auctioning off parts of utilities and oil sectors. However, economists and analysts remain skeptical saying that many firms are obliged to support laid off workers, employ poor accounting practices and rely heavily on Government subsidies (Source Reuters Asia 12/1102).
7. China and the World Trade Organisation (WTO).
As a result of China’s accession to the WTO in December 2001 the market is expected to open up with significantly lower tariffs on the import of high technologies and high value equipment not presently manufactured in the domestic market. These tariffs will continue to be lowered more quickly than for other products. Allowing domestic producers access to the much needed components necessary to enhance their production for both domestic and export markets. This action is very good news for British component manufacturers – many of whom are producing exactly the products required by Chinese manufacturers. However, it is likely that for finished products which are already produced locally the tariffs are unlikely to change in the short term. China is also using its WTO entry to turn the tables and enforce anti-dumping policies to protect its core domestic industries especially the steel industry – taking the lead from recent USA tariff hikes. Problems are also foreseen with the enforcement of pending anti-dumping cases against Chinese manufacturers and the Shanghai municipal government has set up a database of legislation and regulations to assist manufacturers. Details of current tariff concessions for construction equipment and components 2002-2004 can be found in the Off Highway Market Report July 2002 appended to this report.
8. The Chinese Construction Equipment Industry.
Since 1996 demand for construction equipment in China has more than doubled – a rate which is unmatched by any other major region in the world. Massive investment is being made into national and regional infrastructure improvements - China will have more miles of paved roads by 2010 than the USA. Coupled with irrigation programmes, new ports, airports, waterways and the 2008 Olympic Games in Beijing, demand for construction equipment will continue to grow. There are presently over 1,000 Chinese manufacturers of construction equipment including nearly 200 joint ventures with foreign capital. The market for construction equipment was worth in excess of US$6 billion in 2001. Domestic demand in the market has doubled in the past five years and is expected to increase between 10% and 20% per year for the next five years. In 2001 60,199 units of construction equipment were sold. Many of the leading global OEM’s have, or are in the process of setting up joint ventures (JVs) in China and are manufacturing equipment for the domestic market. Notable names with JVs include Caterpillar, Terex, Atlas Copco, Komatsu, Ingersoll-Rand, Daewoo, Hitachi, Hyundai, Dynapac and Kobelco. Both Liebherr and Volvo have recently announced their intentions to manufacture in China independently and facilities are due to open in 2003. John Deere have a co-operation with major OEM, Sany Heavy Construction Machinery Group who are Deere’s exclusive partner in China selling the full range of equipment and spare parts. Domestic manufacturers are producing most types equipment and major demand is for: Crawler dozers Wheeled loaders Motor graders Compaction equipment Mobile cranes Crawler excavators
The market for mobile cranes, wheeled loaders, crawler dozers is dominated by domestic manufacturers. Whereas crawler and wheeled excavator sales are largely accounted for joint ventures with the major OEMs. The market for backhoe loaders and mini excavators is very small at present. However, huge potential increases in production and sales are expected. There are currently five domestic manufacturers and 2 JVs manufacturing backhoes in China. (Source Off Highway Research). A full breakdown of the industry with units produced can be found in the appended copy of the Off Highway Research presentation made to the CECE annual congress in September 2002.
Several factors are holding back the expansion of the domestic market including: Lack of investment Lack of high specification components Lack of production management skills Underdeveloped distribution systems Lack of expertise in exports
Opportunities exist for British companies to provide solutions for these problems. Many Chinese companies are urgently seeking joint ventures and are willing to sell 51% of their shares to inward investors. The huge demand for components, especially hydraulics and fluid power technology, transmissions and high spec engines. Import tariffs have been reduced for components and are expected to stay low in the short term.
9. Trade Associations
Until April 2002 there were two trade associations representing the manufacturers of construction equipment in China. One led by the Ministry of Construction and one by the Ministry of Machinery. Most domestic manufacturers were members of the appropriate association. In April 2002, under the leadership of the State Economic and Trade Commission (SETC), the two associations jointly held their annual meetings and announced that they would merge. The resulting association – the China Construction Machinery Association (CCMA) is extremely powerful and represents all aspects of the industry at national and local levels under the leadership of SETC rather than the ministries. CCMA also has a role in the implementation of the interest of the construction equipment industry interests in the World Trade Organisation and has been instrumental in the reduction of import tariffs and antidumping legislation. CCMA has over 1,400 members covering 90% of the construction equipment industry in China. It is administered by 28 bureaus and committees with 18 product membership categories. The association aims to provide services to Government, enterprises and end users and to stimulate the development of the Chinese construction equipment industry. CCMA activities include statistics, product research and development, consulting and pricing. CCMA has links with other international trade associations and manufacturers. Joanna Oliver and Alan Woods met with CCMA Vice President and Secretary General, Mr Han Xuesong, at Bauma China. Mr Han expressed a strong desire to increase and strengthen business links between China and the UK, emphasising the urgent need for components – especially hydraulics. He felt that British companies were not as well prepared to enter the Chinese Market as some of their competitors in Germany, the USA and Japan and that UKL process tended to be higher than those of competitors. Mr Han stressed the importance of building personal relationships, ensuring company information was provided correctly translated into Chinese and with all measurements in the metric system. He stated that pricing of products could be quoted in Sterling – but that Chinese companies expected payment to be free of bank charges. Mr Han also stressed his willingness to assist any British companies looking to begin exporting to China and would be able to put companies in touch with distributors and agents. He was especially keen to help with the setting up of any joint ventures. CCMA are able to assist with the identification of suitable Chinese companies looking to establish a JV. CCMA will be making a presentation as part of the China Day at the Intermat 2003 exhibition (13-17 May 2003, Paris, France). Contact details China Construction Machinery Association 26 Yuetan Nan Street Beijing 100825 China Phone: +86 (0) 10 6859 6564 Fax: +86 6853 7844 e-mail: info@cncma.org, web site: www.cncma.org and www.cm.sinobnet.com
10. Conclusions.
If British companies are serious about doing business in the region they must appoint a local distributor or agent and expect to support them through regular contact and visits. To do successful Business in China it is vitally important to establish a good personal relationship with your intended customers and partners. Opportunities in China are huge but it is not enough to only offer the best price you need to establish a competitive edge highlighting the unique selling points of your product and excellent after sales service that you will offer. Ask the question why my company and not my German, French or American competitor. Finally there is Guanxi. Guanxi is a Chinese concept symbolizing connectedness in human relationships. In order to make your product’s presence in China last, and ensure your business is successful in the long run, you must understand the concept of Guanxi. Understanding this is potentially more important than all the work researching and establishing foreign offices. Without Guanxi you will never establish the successful relationships that you are working so hard to build. The extract below is taken from an American business web site – www.exportinfo.com but holds true for the British. Technically, “Guanxi” stands for any type of relationship. In the Chinese business world, however, it is also understood as the network of relationships among various parties that cooperate together and support one another. The Chinese businessmen mentality is very much one of "You scratch my back, I’ll scratch yours." In essence, this boils down to exchanging favors, which are expected to be done regularly and voluntarily. The Chinese and Western cultures conduct business differently, even if, on the surface, transactions seem to be the same. The Chinese prefer to work with people they know and trust, so are less inclined to simply close a deal. With a strong relationship, however, you can be trusted and even favored. This relationship extends between companies and also between individuals at a personal level on an ongoing basis. "Guanxi" can take on many forms. It does not have to be based on money. It is completely legal in their culture and not regarded as bribery in any way. So, there is no need to feel uncomfortable about it. Trustworthiness of both the company and individual is an important component. Following through on promises is a good indication of this. Treating someone with courtesy while others treat him or her unfairly is another aspect. Frequent contact fosters friendship as well. Chinese feel obligated to do business with their friends first. There are risks with this system, as well. When something goes wrong, the relationships are challenged, and friendships quickly disappear. Establishing “Guanxi” with high rank officials is also helpful. Although Chinese companies are increasing having to survive without government subsidiaries, many foreign companies still need strong relations with government officials. For example, the process of obtaining a new license to market your products in a new region of China is greatly accelerated and much less expensive with the right connections. The time and money necessary to establish a strong network is well worth the investment. What your business could get in return from the favors for your partners are often more much more valuable, especially in the long run, and when you’re in need. Even domestic businesses in China establish wide networks with their suppliers, retailers, banks, and local government officials. It is very common for individuals of an organization to visit the residence of their acquaintances from other organizations, bringing gifts (such as wine, cigarettes, etc.). While this practice may seem intrusive, as you spend more time learning the Chinese culture, it will become easier to understand and take part in this practice that is so central to successful Chinese commercial activity.
Joanna Oliver Exhibitions Manager November 2002
Key Facts and Useful Tips
Local time UK local time + 8 hours (GMT) Capital City Beijing (Peking) Population: 13.8 million (2001) Commercial Centre Shanghai Population 14 million and growing fast (2002) Official Language Mandarin The regions also have their own dialects in addition to the official language. Written – simplified Chinese Principal Religions Official policy is to tolerate but not to encourage religion, although Buddhism, Taoism are traditional religions and Confucianism remains important to the Chinese way of life. Public / Statutory holidays 2003 New Years Day 1 January Chinese New Year-Spring Festival 12-14 February International Labour Day 1-3 May National Day 1-3 October International dialing code from UK 00 86 drop the initial 0 if calling from outside China Mobile Phones UK mobile phones must be GSM triband to work in China and the service provider must have a roaming agreement with a Chinese company. It would appear that if your phone works in the USA it will work in China. If you are intending to spend a lot of time in China it would be worth investing in a Chinese SIM card to save on bills. Local currency Renminbi or RMB. It is denominated in Yuan. 1 Yuan = 100 Jiao. Coins – small denomination in Jiao, 1 Yuan. Notes are 5, 10, 20, 50 and 100. Notes are different colours depending on year of issue. All are still legal tender. Exchange rate As at 13 November 2002 RMB13.16: £1. Tipping is officially forbidden in China, though small tips are occasionally "expected" by porters and bellboys in larger hotels. The custom is uneven, and tips will still often be refused. A service charge is usually added on to bills in large hotels @15%. Weights and measures Metric – very important when presenting product specifications to Chinese companies. Taxis In Shanghai taxis are plentiful and very cheap. They can be found outside all major hotels and shopping malls or flagged down on the street. Make sure you have your destination written down in Chinese, as drivers will not understand your request. Chinese names for places are usually different than English ones, even if they are the same your chance of pronouncing them correctly are slim. It is not necessary to tip taxi drivers and a receipt is always given.
Arrival at the Airport Although a transfer can be arranged from the main hotels taxis are in good supply at the main international airports and much cheaper. E.G. a hotel transfer from Pudong Airport to central Shanghai costs around £48, a taxi is £12. However taxis tend to have small boots so don’t be surprised to find your luggage sticking out of the back with the boot open – don’t place valuables in the boot. Departure Tax A departure tax is levied on both international and domestic flights and payable in local currency. As at November 2002 this is RMB 90 for international flights and RMB 50 for domestic flights. This must be paid before entering the departure gate area at a well signposted kiosk. Electricity supply 220 volts AC. 50 cycles. Plugs are either two-pin or UK three-pin flat (5-amp) or round two-pin Continental type. Newer hotels tend to have standard electric razor sockets in bathrooms. Hotels and Restaurants Most of the major hotel chains are present in larger cities – with the same high standards. You should ask your Chinese host to make a reservation for you if possible as they will get a much better local rate. For the more adventurous there are many Chinese hotels of all standards. Food is diverse and varies widely from region to region. Ingredients range from the interesting to the highly unusual and food is eaten with chopsticks –this can be very messy. Be prepared to be adventurous and at least have a taste of everything that is offered. The Chinese tend to eat early – about 18.30 for dinner and official dinners often take the form of banquets with main courses brought in quick succession. If you don’t like something your plate will soon be removed so don’t worry. As soon as the final course has been served guests leave – not lingering over coffee and drinks. Health advice / risks If visiting regions south of the Yangtze river between April and December, visitors are advised to take anti-malarial drugs. Although drinking water is reported as being safe in the major cities bottled water is provided by the hotels and is widely available on the streets. Water is not safe to drink outside the major cities. Shanghai had a very dry atmosphere and sore eyes and throats, cracked lips and dry skin are a problem. It is preferable, where possible, to seek treatment only after consultation with the British Consular representative. Health regulations No vaccination certificates are required by visitors from the United Kingdom, unless travellers visit any infected areas en route. Medical services Visitors requiring medical treatment for routine ailments and accidents will find Chinese health services reasonably efficient and conscientious. In emergencies, a doctor may be contacted through your host organisation or hotel staff. At present there are several foreign clinics in both Beijing and Shanghai able to offer western medical services, as well as in Guangzhou. Passports / Visas Visitors will require a valid passport and visa. One passport photo and the original passport must be submitted together with the visa application form. Ensure that your passport will be valid at least several months after the date on which you intend to return to the United Kingdom in case of delays in your return journey. Before you can obtain a business visa for China you must have an invitation from a Chinese organisation such as a ministry, corporation or other institution. It is not unusual for foreign firms to request such invitations from a trading corporation. An invitation in the form of a fax is usually sufficient for the visa application. For up-to-date information concerning visa charges and processing time, contact: The Embassy of the Republic of China Visa Section Open daily 09.00-12.00 31 Portland Place London W1N 3AG Tel. 0891 880808 In practice however, many people choose to obtain tourist visas. China does not recognise dual nationality.
Useful contacts in China
Ministry of Construction Zheng Shuling Deputy Director-General Department of International Affairs Ministry of Construction 9 Sanlihe Road Beijing 100835 Tel +86(0) 10 68394083 Fax +86(0) 10 6831 3669 Pan Xiao Director Division of Europe and Africa Department of International Affairs Ministry of Construction 9 Sanlihe Road Beijing 100835 Tel +86(0) 10 68393038 Fax +86(0) 10 68313669
Ms Song Xiuming Officer Ministry of Construction Information Centre Ministry of Construction 9 Sanlihe Road Beijing 100835 Tel +86(0) 10 68394215/68393575 Fax +86(0) 10 68393333
Nie Meisheng (Professor) Science and Technology Committee The Centre for Housing Industrialisation Ministry of Construction 9 Sanlihe Road Beijing 100835 Tel +86(0) 10 68393411 Fax +86(0) 10 68314697
Architectural Design Institute Cui Kai
Vice President Chief Architect Architecture Design Institute,
Beijing Institute of Architectural Design and Research Shao Weiping
Deputy Chief Architect BIADR
No 19A, Che Gong Zhuang St Beijing 100044
Tel +86(0) 106836 0618 Fax +86(0) 6834 7374
62 Nan Lishi Rd, Beijing 100045
Tel +86(0) 10 6801 1155 Fax +86(0) 10 6802 2803
Shanghai Modern Architectural Design (Group) Co., Ltd Li Jiaping Manager, Business Management Department Shanghai Modern Architectural Design (Group) Co., Ltd 258 Shimen Er Road Shanghai 200041 Tel +86(0) 21 6246 4274 Fax +86(0) 21 6246 4000 E-mail smad@sh163a.sta.net.cn
Building Materials contacts: Mr Zou Chuansheng Standing Vice-President China Building Material Industrial Association Bai Wan Zhuang Beijing 100831 Tel +86(0) 10 68394706 Fax +86(0) 10 68332658 Mr Pan Donghui Director, Foreign Affairs Office China Building Material Industrial Association Ban Wan Zhuang Beijing 100831 Tel +86(0) 10 6831 1144 Ext.2261/2262 Fax +86(0) 10 6831 2191
British Centre for Building and Construction in China (BCBC)
Contact in China Prof Chengde Chen British Centre for Building and Construction in China Suite E05, 10/F Shanghai Mart No 2299 Yan An Rd (W) Shanghai 200336 Tel +86 21 6236 0979 Fax +86 21 6236 0977 Contact in UK Nigel Chaldecott OBE 30 Orchard Way Send Woking GU23 7HS
Tel 01483 225612 Fax 01483 223631
For a report on Building Materials contact: Mona Shah Construction Export Sponsorship Division 3/J4 Eland House Bressenden Place London SW1E 5DU Tel 0207 890 5682 Fax 0207 890 5669
Promotion
Materials
Chinese language web sites only: Ministry of Construction (MoC) http://www.cin.gov.cn State Development and Planning Commission (SDPC) http://www.sdpc.gov.cn
Useful Web Sites
Gateway Portals Asian Studies Network Information Centre http://asnic.utexas.edu/asnic/ This site provides a wide variety of excellent links covering several individual Asian countries and the whole of Asia, South Asia, East Asia, Southeast Asia and Asia Pacific. Links include journals, maps, organisations and economic sites. Britain In Asia Pacific NEW! http://www.britaininasiapacific.net Britain in Asia Pacific (previously known as the Association of British Business in Asia) comprises the British chambers of commerce and business associations in various countries throughout the Asia Pacific region. Background information on all the member Chambers is included in the site, with links to their homepages where available. China Online http://www.chinaonline.com China Online is a unique online news and analysis website that provides business information on China. As well as current news headlines, it offers archives on selected sectors (agriculture, cars, IT, electronics and telecoms), links to company websites, other useful links on China and its industries, media and advertising information, a calendar of trade fairs, laws and regulations, stock market data, and more.
Market and Background Information Asian Development Bank http://www.asiandevbank.org Publishes an Internet edition of ADB Business Opportunities, which is free of charge and updated weekly. It includes details of the latest procurement notices. Far Eastern Economic Review http://www.feer.com FEER reports by sector, e.g. agriculture, telecommunications, or by country. 27 countries, including sites for Australia, Bhutan, Brunei, Cambodia, Fiji, Laos, Nepal, New Zealand, Papua New Guinea, Sri Lanka and Vanuatu. Links to some general Far Eastern web sites.
Country Information China Window NEW! http://www.china-window.com.cn/indexe.html China Window Inc. is a joint Chinese US venture. Links to major Chinese city sites. Information on country, government and business activities. ELDIS NEW! http://nt1.ids.ac.uk/eldis/newcountry.htm A substantial website, which specialises in providing links to information on countries in Africa, Asia, Latin America and the Middle East. Coverage includes social, economic, political and environmental issues. The site also now includes sectoral profiles for each country, although this area is still under construction. Interfax China NEW! http://www.interfax.com/com?item=Chin Site offers China business news, including sector information. World Information NEW! http://www.worldinformation.com Reliable, relevant business, political and economic information on all the worlds 228 countries and territories. The site also includes overviews of each region and an easy print option.
Economic Data Asia Pacific Economic Cooperation http://www.apecsec.org.sg Extensive site with various links. Created to foster open trade and economic cooperation among the Asia Pacific economies, APEC offers a wide range of services of its website economic indicators, guide to investment regimes, labour market information and tariff databases, information on government procurement and trade opportunities, news and publications.
Events Asian Sources http://www.asia.globalsources.com This site provides a directory which is searchable by product or supplier. It also gives market news and lists trade shows and events. Other country specific sites for Asian market are available. Beijing Olympic Games 2008 NEW! http://www.beijing2008china.com Official site of the Beijing Olympic Games in 2008 in China. This site is useful for companies interested in business opportunities arising from this event. China World Trade Web http://www.chinaonweb.com Provides market information, plus details of trade shows and laws and regulations. Also includes an import and export directory, organised initially by sector then by city. Chinese Business World http://cbw.com Useful site for keeping up to date with trade events and business news in China. Also provides a couple of small directories.
Industry Information China Automotive Consulting http://www.cacauto.com Excellent site for the Chinese automotive industry, providing weekly news, business opportunities, statistical information, policy, publications and reports on the industry. ChinaExperts http://www.chinaexperts.org.uk The Higher Education Funding Council for England (HEFCE), and the Scottish Higher Education Funding Council (SHEFC), have sponsored the creation of ChinaExperts to connect businesses and other organisations with the UK academic expertise they need relating to China, Singapore and Taiwan. Register free to search a database of academics and other experts on international relations, trade, policies, regulations and more.
International Organisations BESO (British Executive Service Overseas) NEW! http://www.beso.org BESO is a development agency that offers the professional expertise of volunteers as advisers to organisations in less developed communities and economies in transition worldwide. It responds to requests for assistance from public, private and voluntary sector organisations ranging from governments and local authorities, to the media, educational and health institutions. Since 1972, BESO has given technical and managerial advice to small businesses and local industries in over 146 countries and has completed nearly 7,500 assignments. BESO is supported mainly by the Department for International Development (DFID), as well as British industry, charitable Trusts and individuals. It also collaborates with the European Union and other multi-lateral aid organisations.
Consulting Base NEW! http://www.consultingbase.com Consulting Base are an international exchange for consultants working in developing countries and emerging markets. The site provides directories of independent consultants and consulting firms specialising in development consulting, access to daily news from over 150 countries, economic and sector analyses for over 200 countries, links to useful resources, work opportunities, daily updated industry news, consulting tools and guides, and more... International Division of the Adam Smith Institute NEW! http://www.adamsmithinstitute.com This is the official site of the international division of the Adam Smith Institute. they provide consultancy services and training conferences for overseas governments, ministers and officials. Also it provides information on future training conferences, ongoing projects and procurement opportunities for the projects in which they are involved. In addition the site has a link section that provides a gateway to suitable overseas markets. The Asian Development Bank http://www.adb.org/ ADB is a multilateral development finance institution dedicated to reducing poverty in Asia and the Pacific. Established in 1966. Its site provides news and event on recent project development, economic and statistic on Asian development and many more
Investment Information Cockatoo Press Online http://www.asiatour.com/bahrain/content1.htm This site provides general market information for a number of Asian countries. Information includes travel, history, economy and government as well as useful links.
Overseas Government Sites China Council for the Promotion of International Trade (CCPIT) http://www.ccpit.org This government agency aims to assist Chinese businesses in international trade. The website contains information about the Chinese economy, including a biweekly newsletter details of business laws and regulations regional information and useful links. China Ministry of Foreign Trade and Economic Cooperation http://www.moftec.gov.cn PRC government site containing policies, regional trade and economic information, regulations and tariffs, foreign trade statistics up to first half of 1998. Also daily trade news, company directory and Top 100 and 500. Chinese Embassy in the United Kingdom NEW! http://www.chinese-embassy.org.uk Site for the embassy of the People’s Republic of China in the UK. Includes information on diplomacy, visas, economy and trade, culture and arts, and science and technology.
Statistical Sites B2B China.com http://www.b2bchina.com.hk This business to business site offers chargeable services, also offers free information on trade statistics in China, regulations, tariff information and links to other relevant sites. Statistical Agencies (International) NEW! http://www.census.gov/main/www/stat_int.html This site links to most if not all statistical agency of every country
Contacts Big Yellow http://sp1.superpages.com/cgi-bin/php/global/... This is a compilation of yellow page directories from around the Asia Pacific region and you’ll find links to white pages where they are available. There are also links to news, travel and weather information sites. Britain In Asia Pacific NEW! http://www.britaininasiapacific.net Britain in Asia Pacific (previously known as the Association of British Business in Asia) comprises the British chambers of commerce and business associations in various countries throughout the Asia Pacific region. Background information on all the member Chambers is included in the site, with links to their homepages where available. CCPIT-Shanghai http://ccpitshm.asiansources.com Small membership directory of Shanghai companies, providing full contact details and brief description of products. China Exporter http://www.chinaexporter.com Search for manufacturers by location, product or keyword. Only the suppliers directory is currently in English. The site also has listings of the top ten companies by trade or by province and a bulletin board for posting messages and advertisements. DragonWeb http://dragonweb.com Business directory for China, providing contact details. Search by product or service. The site also includes links to other useful sites in China. Hi China http://hk.hichina.com Company information with links to company sites. Import Export Internet Advertising NEW! http://www.importers-exporters.com/buyers_imp... This site provides a directory of companies which are catalogued within 30 product/industry sectors. Each entry provides contact information and companies` basic information Orient Business Express http://www.accessasia.com Includes over 850,000 company listings but it is fee-based. Trade 2000 http://www.trade2000.com US site promoting trade in and with China. Links to Chinese companies, services and suppliers. Search by company name, sector or keyword. Webtrade Directory http://www.webtrade.com.hk Details of suppliers, foreign consulates and business partners in Hong Kong and China. Search by product category or company name. Also general business information.
Business Directories Asian Sources http://www.asia.globalsources.com This site provides a directory which is searchable by product or supplier. It also gives market news and lists trade shows and events. Other country specific sites for Asian market are available. China Business Pages http://www.chinapages.com Aims to provide business news and information on Chinese industry. Contains links to city profiles, and can be searched by manufacturing sector to access company details.
General Directories China World Trade Web http://www.chinaonweb.com Provides market information, plus details of trade shows and laws and regulations. Also includes an import and export directory, organised initially by sector then by city.
Industry Directories China Chemical Network http://www.chinachemnet.com This website is a vertical network serving the Chinese chemical industry. It is useful because of its supplier’s database; Search over 50,000 chemical product records and 17,000 chemical manufacturers with detailed information around China. Search by the name of the product. It also has links to other useful sites and online chemical journals
Yellow Pages ChinaPages http://www.chinapages.com Can search for Chinese companies by yellow pages headings, or find information on development zones, investment projects and business travel.
Business News Hong Kong Trade Development Council (TDC) NEW! http://www.tdctrade.com Provides details on 100,000 Hong Kong suppliers and 500,000 buyers in the Chinese mainland and worldwide. It also has information on trade fairs in Hong Kong and China, an online credit search, shipping schedules and a virtual SME information centre providing information on financing and ecommerce. It provides information on commercial opportunities, contracts and tenders relating to the 2008 Beijing Olympic Games. Interfax Information Services http://www.interfax-news.com Provider of business, political and financial news from Central and Eastern Europe and Asia. Reports cover industry sectors and business opportunities, with regular news of new legislation.
Business Journals Asia Pacific Economic Cooperation http://www.apecsec.org.sg Extensive site with various links. Created to foster open trade and economic cooperation among the Asia Pacific economies, APEC offers a wide range of services of its website economic indicators, guide to investment regimes, labour market information and tariff databases, information on government procurement and trade opportunities, news and publications. Asian Studies Network Information Centre http://asnic.utexas.edu/asnic/ This site provides a wide variety of excellent links covering several individual Asian countries and the whole of Asia, South Asia, East Asia, Southeast Asia and Asia Pacific. Links include journals, maps, organisations and economic sites. Cockatoo Press Online http://www.asiatour.com/bahrain/content1.htm This site provides general market information for a number of Asian countries. Information includes travel, history, economy and government as well as useful links.
Commercial Sites Aemhk.com NEW! http://www.aemhk.com This site advertises commercial services aimed at engineering companies exporting to China. Services include translation and communication of technical engineering issues. AFTA Online.com http://www.aftaonline.com This commercial site provides data for sale about the ten ASEAN economies, including country, industry and company information. China Business Solutions http://www.ChinaBusinessSolutions.co.uk Commercial site that provides specialist consultancy services to British small and medium size enterprises wishing to enter Chinese market. Services cover: market research, credit reporting, intellectual property protection and business representation in China. Consensus Economics - Asia Pacific http://www.consensuseconomics.com/apcf.htm This company provides digests of economic forecasts by region. Most of the information is fee based, however free sample downloads for several regions from last year are available. Adobe Acrobat is required to view the data. Databuero NEW! http://www.databeuro.com Databuero specialise in supplying a vast range of authoritative publications and data from intergovernmental organisations, such as the OECD, IMF, IEA, WTO and Eurostat. EastBridge Associates http://www.eba.uk.co Company offering a range of consultancy services for companies and other organisations doing business with China - strategic planning, negotiation, translation accompanying visitors. Also provides services for incoming Chinese delegations Kogan Page http://www.kogan-page.co.uk This site provides an online catalogue of the export related publications that they produce, mainly the "Doing Business with ...." series. Some of the publications are produced in association with Trade Partners UK. Newell PR http://www.newell.com Site of public relations consultancy for companies seeking exposure in Hong Kong, China, Asia-Pacific region. Business and technology media contacts. Political and Economic Risk Consultancy http://www.asiarisk.com Commercial site, specializing in risk analysis of East and Southeast Asia. Quarterly reports and economic indicators available, also chargeable in-depth analysis. Gateway to economic and political sites in Asia. Santranslate.com http://www.santranslate.com/ This site offers a specialist Chinese / English translation service. Includes documentation, websites and metatags. Sino Infrastructure Partnership http://www.sips.co.uk This is a commercial consultancy company based in the UK It provides a range of general, commercial and technical business support services for clients proposing to invest or already investing in China; principally but not solely associated with the industrial, mining, construction and construction related sectors. Texindex.com http://www.texindex.com Commercial site and portal for textile industry in China. Includes contact information and worldwide sales leads
XYZ Communications http://www.xyzcom.co.uk XYZ communications is a UK based consultancy providing assistance to British companies in the China market. They provide a range of services and support, including market research information, relationship building, translation, liaison with government and academic institutions, and advice on business protocol and etiquette.
Business to Business Portals Other Trade Opportunities B2B China.com http://www.b2bchina.com.hk This business to business site offers chargeable services, also offers free information on trade statistics in China, regulations, tariff information and links to other relevant sites. China Chemical Network http://www.chinachemnet.com This website is a vertical network serving the Chinese chemical industry. It is useful because of its suppliers database, Search over 50,000 chemical product records and 17,000 chemical manufacturers with detailed information around China. Search by the name of the product. It also has links to other useful sites and online chemical journals
Appended to this report: Off Highway Research – Presentation made to the CECE Congress, Rome September 2002. Off Highway Research China Market Report, July 2002. Rouse and Co International – A Brief guide to Intellectual Property in China. British Consulate Sector Summaries for Shanghai Oil, Gas and Petroleum, Shanghai Environment and Infrastructure. China National Construction Machinery Corporation 2003 Market Forecast of Construction Machinery Sector in China. Bauma China leaflet.
Ref: CEA/exhibitions/CEA/Bauma China/CEA/Report