Newsletter3 April 2018

FCCC/EUCBA ACTIVITIES

Info session: Opportunities in the horticulture sector: World Horticulture Expo 2019 – 23 April 2018 –Ghent

The Flanders-China Chamber of Commerce (FCCC) and the Province of East-Flanders are organizing an information session on the opportunities of participating in the Belgian garden at the World Horticulture Expo in Beijing in 2019. The seminar will be held on 23 April 2019 at 17:30 at PAC – Het Zuid, Woodrow Wilsonplein 2, 9000 in Ghent.

The World Horticulture Expo, themed 'Live Green, Live Better', will be held from April 29 till October 7, 2019. The Expo covers an area of 503 hectares, of which the Belgian garden will cover 1,500 square meters to promote Belgian horticulture. The organizers expect to welcome 16 million visitors, 20% from outside China. Expo 2019 will be organized for the first time in the vicinity of the Great Wall.

The Expo will focus on green technology, the best available technology and innovative applications, including vertical cultivation, multilayer cultivation and hydroponics.

Programme

17:30 Registration18:00 Welcome by Martine Verhoeve, Vice Governor Foreign Affairs and Economy, Province of East-Flanders18:10 – 18:20 Introduction by Gwenn Sonck, Executive Director, Flanders-China Chamber of Commerce18:20 – 18:35 Speech by Pieter Van Oost, Secretary, Belgian Nurserymen and Growers Federation (AVBS)18:35 – 18:55 “The Belgian garden at the World Horticulture Expo”, by Aldwin Dekkers, Belgian Commissioner General's Office of International Expositions, FOD Economy

Newsletter3 April 2018

FCCC/EUCBA ACTIVITIES

Info session: Opportunities in the horticulture sector: World Horticulture Expo 2019 – 23 April 2018 –Ghent

The Flanders-China Chamber of Commerce (FCCC) and the Province of East-Flanders are organizing an information session on the opportunities of participating in the Belgian garden at the World Horticulture Expo in Beijing in 2019. The seminar will be held on 23 April 2019 at 17:30 at PAC – Het Zuid, Woodrow Wilsonplein 2, 9000 in Ghent.

The World Horticulture Expo, themed 'Live Green, Live Better', will be held from April 29 till October 7, 2019. The Expo covers an area of 503 hectares, of which the Belgian garden will cover 1,500 square meters to promote Belgian horticulture. The organizers expect to welcome 16 million visitors, 20% from outside China. Expo 2019 will be organized for the first time in the vicinity of the Great Wall.

The Expo will focus on green technology, the best available technology and innovative applications, including vertical cultivation, multilayer cultivation and hydroponics.

Programme

17:30 Registration18:00 Welcome by Martine Verhoeve, Vice Governor Foreign Affairs and Economy, Province of East-Flanders18:10 – 18:20 Introduction by Gwenn Sonck, Executive Director, Flanders-China Chamber of Commerce18:20 – 18:35 Speech by Pieter Van Oost, Secretary, Belgian Nurserymen and Growers Federation (AVBS)18:35 – 18:55 “The Belgian garden at the World Horticulture Expo”, by Aldwin Dekkers, Belgian Commissioner General's Office of International Expositions, FOD Economy

NEWSLETTER 3 APRIL 2018 2

18:55 – 19:10 Testimonial Deroose Plants & Exotic Plant in China, by Reginald Deroose, CEO 19:05 – 19:20 Q&A19:20 – 20:00 Networking

Practical information

Location: PAC Het Zuid, Woodrow Wilsonplein 2, 9000 GhentStarting at 17:30Participation is free of charge.

Please register before April 20, 2018 here.

Contact: FCCC info@flanders-china.be

Workshop Negotiating with the Chinese: CulturalRoots & Practical Recommendations – 24 April

2018 at 13h30 – Zwevegem

“Building a win-win partnership through the art ofnegotiation”

The Flanders-China Chamber of Commerce, VOKA West Flanders and the Cheung Kong Graduate School of Business have the pleasure to invite you to the workshop: ‘Negotiating with the Chinese: Cultural Roots & Practical Recommendations’, which will take place on April 24 at 13h30 at Bekaert NV, Bekaertstraat 2, 8550 Zwevegem.

Mr Bo Ji, Chief Representative Europe & Assistant Dean Global Executive Education of the Cheung Kong Graduate School of Business, will be the keynote speaker.

This seminar offers guidance to business leaders on how toleverage cultural differences, complexity, uncertainty, and conflicts during the negotiation process with their Chinese partners. It delivers direct impact on a company’s bottom line to support individuals who are doing business with a fast-changing China.

Attendees will gain a comparative understanding of the practical Chinese and Western approaches to negotiation as well as sharpen their own negotiation skills through learning from multiple case studies and real-life contexts. Furthermore, they will identify the cultural roots behind business scenarios, which will provide them with the knowledge to reshape their strategies and tactics. The attending business leaders will also learn to optimize their

approach to a win-win value creation through negotiating with the Chinese to achieve a sustainable partnership.

Programme

13:30 Registration14:00-14:15 Opening Remarks by Ms Gwenn Sonck, Executive Director, Flanders-China Chamber of Commerce14:15-15:00 China vs West: different cultural negotiating models15:00-15:45 Chinese cultural roots and elements to shape the negotiating skills15:45-16:00 Break16:00-16:45 Strategies that lead you to a better negotiationoutcome16:45-17:00 Group discussion17:00-18:00 Networking

If you are interested in attending this event, please register here.

Practical informationLocation: Bekaertstraat 2, 8550 ZwevegemPrice for members: € 180 (excl. VAT) – Price for non-members: € 240 (excl. VAT)

ContactFCCC: info@flanders-china.be

NEWSLETTER 3 APRIL 2018 2

18:55 – 19:10 Testimonial Deroose Plants & Exotic Plant in China, by Reginald Deroose, CEO 19:05 – 19:20 Q&A19:20 – 20:00 Networking

Practical information

Location: PAC Het Zuid, Woodrow Wilsonplein 2, 9000 GhentStarting at 17:30Participation is free of charge.

Please register before April 20, 2018 here.

Contact: FCCC info@flanders-china.be

Workshop Negotiating with the Chinese: CulturalRoots & Practical Recommendations – 24 April

2018 at 13h30 – Zwevegem

“Building a win-win partnership through the art ofnegotiation”

The Flanders-China Chamber of Commerce, VOKA West Flanders and the Cheung Kong Graduate School of Business have the pleasure to invite you to the workshop: ‘Negotiating with the Chinese: Cultural Roots & Practical Recommendations’, which will take place on April 24 at 13h30 at Bekaert NV, Bekaertstraat 2, 8550 Zwevegem.

Mr Bo Ji, Chief Representative Europe & Assistant Dean Global Executive Education of the Cheung Kong Graduate School of Business, will be the keynote speaker.

This seminar offers guidance to business leaders on how toleverage cultural differences, complexity, uncertainty, and conflicts during the negotiation process with their Chinese partners. It delivers direct impact on a company’s bottom line to support individuals who are doing business with a fast-changing China.

Attendees will gain a comparative understanding of the practical Chinese and Western approaches to negotiation as well as sharpen their own negotiation skills through learning from multiple case studies and real-life contexts. Furthermore, they will identify the cultural roots behind business scenarios, which will provide them with the knowledge to reshape their strategies and tactics. The attending business leaders will also learn to optimize their

approach to a win-win value creation through negotiating with the Chinese to achieve a sustainable partnership.

Programme

13:30 Registration14:00-14:15 Opening Remarks by Ms Gwenn Sonck, Executive Director, Flanders-China Chamber of Commerce14:15-15:00 China vs West: different cultural negotiating models15:00-15:45 Chinese cultural roots and elements to shape the negotiating skills15:45-16:00 Break16:00-16:45 Strategies that lead you to a better negotiationoutcome16:45-17:00 Group discussion17:00-18:00 Networking

If you are interested in attending this event, please register here.

Practical informationLocation: Bekaertstraat 2, 8550 ZwevegemPrice for members: € 180 (excl. VAT) – Price for non-members: € 240 (excl. VAT)

ContactFCCC: info@flanders-china.be

NEWSLETTER 3 APRIL 2018 3

Unicorn or Dragon: How to Tap into the ChineseMarket for Growth? – 25 April 2018 at 17h00 –

Brussels

The Flanders-China Chamber of Commerce and Startups.be have the pleasure to invite you to our conference on 'Unicorn or Dragon: How to Tap into the Chinese Market for Growth?' on Wednesday 25 April 2018from 17:00-19:00 at BECENTRAL, Cantersteen 10 , 1000Brussels.

With a population over 1.3 billion and 1 billion cyber citizens, sharing 1/5 of world GDP, China is now the secondlargest economy in the world. It is definitely a booming market.

Global business leaders consider China as a key market in their global business strategies. Chinese business models, consumer behaviours, e-commerce, and social media have changed tremendously in the last 30 years.

It is essential for entrepreneurs to understand the way of doing business in China taking into account the important potential of the Chinese market. Expanding to China becomes a must but with challenges to lead ahead.

This event provides a unique opportunity for start-ups to learn how to avoid failures, overcome difficulties and succeed in China. It provides participants with deep insightsabout Chinese business models and ways to enter the Chinese Market.

CEOs, founders and managers from start-ups and growth companies. People who are interested in doing business with China.

Agenda:17:00 Signup & Networking17:20 Welcome by startups.be17:30 Speech by Gwenn Sonck, Executive Director, Flanders-China Chamber of Commerce17:40 Keynote Speech “Unicorn or Dragon: How to tap intothe Chinese Market for Growth”Bo Ji, Chief Representative & Assistant Dean of CKGSB Europe18:40 Q&A Session18:50 Networking

If you are interested in the event, please subscribe here before 23 April 2018. FCCC members free, non-members: €55.

From 9 – 13 July 2018, Startups.be and EYnovation organise a high-level startup mission to Hong Kong and Shenzhen, with a focus on fintech, IOT and health. It is a perfect opportunity to discover the fast- growing Shenzhen and Hong Kong ecosystems by attending Asia’s most important startup conference (RISE Conference) and meet all the important players in the local communities.

Bo Ji is an inspiring TEDx speaker, a Chinapreneur, and a game changer for global startups expanding into China

Bo is currently the Assistant Dean & Chief Representative for Europe at Cheung Kong Graduate School of Business (CKGSB), a top business school with more than 10,000 Chairman/CEO level alumni in China. Bo had an over-20-year successful business career in Global Business Development, Innovation, Strategy, Supply Chain Management, M&A, etc. He served as the senior executive at the headquarters of many fortune 500 companies such as Monsanto, Cargill, Pfizer, Wrigley, and Mars. He is also a well-sought conference speaker.

Combining his extensive business experiences and in-depth knowledge, Bo has been teaching EMBA/MBA at some of the world’s most prestigious business schools suchas INSEAD, Esade, MIT, New York University, Hong Kong University of Science and Technology, Technology University of Munich, Tsinghua University, CKGSB, Zhejiang University, Sun Yat-Sen University, Shanghai Jiaotong University and Taiwan’s National Chengchi University etc. In addition, Bo also offers advice to Chairmen and CEOs. He is also a frequent speaker at renowned international conferences, forums, TV media andannual corporate meetings.

Bo created the first ever “China Start” program to systematically bring global startups to China. Bo is a strong advocate of startup China expansion. He is instrumental in developing "China Start" program to help European

NEWSLETTER 3 APRIL 2018 3

Unicorn or Dragon: How to Tap into the ChineseMarket for Growth? – 25 April 2018 at 17h00 –

Brussels

The Flanders-China Chamber of Commerce and Startups.be have the pleasure to invite you to our conference on 'Unicorn or Dragon: How to Tap into the Chinese Market for Growth?' on Wednesday 25 April 2018from 17:00-19:00 at BECENTRAL, Cantersteen 10 , 1000Brussels.

With a population over 1.3 billion and 1 billion cyber citizens, sharing 1/5 of world GDP, China is now the secondlargest economy in the world. It is definitely a booming market.

Global business leaders consider China as a key market in their global business strategies. Chinese business models, consumer behaviours, e-commerce, and social media have changed tremendously in the last 30 years.

It is essential for entrepreneurs to understand the way of doing business in China taking into account the important potential of the Chinese market. Expanding to China becomes a must but with challenges to lead ahead.

This event provides a unique opportunity for start-ups to learn how to avoid failures, overcome difficulties and succeed in China. It provides participants with deep insightsabout Chinese business models and ways to enter the Chinese Market.

CEOs, founders and managers from start-ups and growth companies. People who are interested in doing business with China.

Agenda:17:00 Signup & Networking17:20 Welcome by startups.be17:30 Speech by Gwenn Sonck, Executive Director, Flanders-China Chamber of Commerce17:40 Keynote Speech “Unicorn or Dragon: How to tap intothe Chinese Market for Growth”Bo Ji, Chief Representative & Assistant Dean of CKGSB Europe18:40 Q&A Session18:50 Networking

If you are interested in the event, please subscribe here before 23 April 2018. FCCC members free, non-members: €55.

From 9 – 13 July 2018, Startups.be and EYnovation organise a high-level startup mission to Hong Kong and Shenzhen, with a focus on fintech, IOT and health. It is a perfect opportunity to discover the fast- growing Shenzhen and Hong Kong ecosystems by attending Asia’s most important startup conference (RISE Conference) and meet all the important players in the local communities.

Bo Ji is an inspiring TEDx speaker, a Chinapreneur, and a game changer for global startups expanding into China

Bo is currently the Assistant Dean & Chief Representative for Europe at Cheung Kong Graduate School of Business (CKGSB), a top business school with more than 10,000 Chairman/CEO level alumni in China. Bo had an over-20-year successful business career in Global Business Development, Innovation, Strategy, Supply Chain Management, M&A, etc. He served as the senior executive at the headquarters of many fortune 500 companies such as Monsanto, Cargill, Pfizer, Wrigley, and Mars. He is also a well-sought conference speaker.

Combining his extensive business experiences and in-depth knowledge, Bo has been teaching EMBA/MBA at some of the world’s most prestigious business schools suchas INSEAD, Esade, MIT, New York University, Hong Kong University of Science and Technology, Technology University of Munich, Tsinghua University, CKGSB, Zhejiang University, Sun Yat-Sen University, Shanghai Jiaotong University and Taiwan’s National Chengchi University etc. In addition, Bo also offers advice to Chairmen and CEOs. He is also a frequent speaker at renowned international conferences, forums, TV media andannual corporate meetings.

Bo created the first ever “China Start” program to systematically bring global startups to China. Bo is a strong advocate of startup China expansion. He is instrumental in developing "China Start" program to help European

NEWSLETTER 3 APRIL 2018 4

startups to expand to China. He frequently appears at techconference all across Europe as keynote speaker.

About Cheung Kong Graduate School of BusinessCheung Kong Graduate School of Business (CKGSB) aims to cultivate business leaders with a global vision, a humanistic spirit, a strong sense of social responsibility andan innovative mindset. Established in Beijing in November 2002 with generous support from the Li Ka Shing Foundation, CKGSB is China’s first faculty-governed, non-profit, independent business school.

Since its founding, CKGSB has developed into a prominentbusiness school with more than 40 full-time professors, whohave earned their PhDs or held tenured faculty positions at leading business schools such as Harvard, Wharton and Stanford. Their research has provided the basis for more than 400 case studies of both China-specific and global issues. CKGSB also stands apart for its unmatched alumni network. More than half of CKGSB’s 10,000+ alumni are at the CEO or Chairman level and, together, their companies’ revenues account for 1/5 of China’s GDP.

CKGSB strives to understand business in a better-rounded capacity, beyond the traditional boundaries of business schools. For instance, in 2005, CKGSB pioneered the integration of the humanities into its curricula to give students a long-term and holistic view of business and development. The school’s EMBA students—more than 80% of whom are above the Vice President level—are also required to complete six days of community work before receiving their degrees. In 2014, CKGSB was the first Chinese business school to develop a philanthropy program aimed at equipping the school’s alumni with expertise on setting up and managing foundations and engaging in philanthropy.

CKGSB is also Mainland China’s most globalized business school. Besides its three campuses in Beijing, Shanghai and Shenzhen, the school has established offices in London, New York and Hong Kong. Moreover, it has formedstrategic partnerships for joint programs and research with leading schools worldwide, such as Columbia Engineering in the US, IMD in Switzerland and FDC in Brazil.

The school offers the following innovative courses: MBA, Finance MBA, Executive MBA, Business Scholars Program(DBA); and Executive Education programs.

For more information, please visit http://english.ckgsb.edu.cn/

ACTIVITIES SUPPORTED BYFCCC

China International Import Expo – November 5-10, 2018 – Shanghai

In May 2017, Chinese President Xi Jinping announced at the Belt and Road Forum for International Cooperation that China will hold the first China International Import Expo (CIIE) starting from 2018. It is a significant move for the Chinese Government to hold CIIE to firmly supporting tradeliberalization and economic globalization and actively opening the market to the world.We have the pleasure to inform you that your company is kindly invited to participate in the China International ImportExpo (CIIE). This international fair will take place at the National Exhibition and Convention Center in Shanghai from 5 to 10 November 2018.

The CIIE is hosted by the Ministry of Commerce of the People’s Republic of China and the Shanghai Municipal People’s Government and supported by the World Trade Organization, United Nations Conference on Trade and Development and the United Nations Industrial Development Organization.

The Fair is organised by the China International Import Expo Bureau and the China National Exhibition and Convention Center (Shanghai).

China is the second largest economy, as well as the secondlargest importer and consumer in the world. China has entered a new development stage at which consumption keeps increasing, indicating an enormous potential for the growth of consumption and import. In the next five years, China is expecting to import products and services valuing more than 10 trillion U.S. dollars, which provides a historic

NEWSLETTER 3 APRIL 2018 4

startups to expand to China. He frequently appears at techconference all across Europe as keynote speaker.

About Cheung Kong Graduate School of BusinessCheung Kong Graduate School of Business (CKGSB) aims to cultivate business leaders with a global vision, a humanistic spirit, a strong sense of social responsibility andan innovative mindset. Established in Beijing in November 2002 with generous support from the Li Ka Shing Foundation, CKGSB is China’s first faculty-governed, non-profit, independent business school.

Since its founding, CKGSB has developed into a prominentbusiness school with more than 40 full-time professors, whohave earned their PhDs or held tenured faculty positions at leading business schools such as Harvard, Wharton and Stanford. Their research has provided the basis for more than 400 case studies of both China-specific and global issues. CKGSB also stands apart for its unmatched alumni network. More than half of CKGSB’s 10,000+ alumni are at the CEO or Chairman level and, together, their companies’ revenues account for 1/5 of China’s GDP.

CKGSB strives to understand business in a better-rounded capacity, beyond the traditional boundaries of business schools. For instance, in 2005, CKGSB pioneered the integration of the humanities into its curricula to give students a long-term and holistic view of business and development. The school’s EMBA students—more than 80% of whom are above the Vice President level—are also required to complete six days of community work before receiving their degrees. In 2014, CKGSB was the first Chinese business school to develop a philanthropy program aimed at equipping the school’s alumni with expertise on setting up and managing foundations and engaging in philanthropy.

CKGSB is also Mainland China’s most globalized business school. Besides its three campuses in Beijing, Shanghai and Shenzhen, the school has established offices in London, New York and Hong Kong. Moreover, it has formedstrategic partnerships for joint programs and research with leading schools worldwide, such as Columbia Engineering in the US, IMD in Switzerland and FDC in Brazil.

The school offers the following innovative courses: MBA, Finance MBA, Executive MBA, Business Scholars Program(DBA); and Executive Education programs.

For more information, please visit http://english.ckgsb.edu.cn/

ACTIVITIES SUPPORTED BYFCCC

China International Import Expo – November 5-10, 2018 – Shanghai

In May 2017, Chinese President Xi Jinping announced at the Belt and Road Forum for International Cooperation that China will hold the first China International Import Expo (CIIE) starting from 2018. It is a significant move for the Chinese Government to hold CIIE to firmly supporting tradeliberalization and economic globalization and actively opening the market to the world.We have the pleasure to inform you that your company is kindly invited to participate in the China International ImportExpo (CIIE). This international fair will take place at the National Exhibition and Convention Center in Shanghai from 5 to 10 November 2018.

The CIIE is hosted by the Ministry of Commerce of the People’s Republic of China and the Shanghai Municipal People’s Government and supported by the World Trade Organization, United Nations Conference on Trade and Development and the United Nations Industrial Development Organization.

The Fair is organised by the China International Import Expo Bureau and the China National Exhibition and Convention Center (Shanghai).

China is the second largest economy, as well as the secondlargest importer and consumer in the world. China has entered a new development stage at which consumption keeps increasing, indicating an enormous potential for the growth of consumption and import. In the next five years, China is expecting to import products and services valuing more than 10 trillion U.S. dollars, which provides a historic

NEWSLETTER 3 APRIL 2018 5

opportunity for enterprises across the world to enter the large Chinese market.

The following sectors will be represented in the Fair:High-end intelligent equipment; consumer electronics & appliances; apparel, accessories & consumer goods; automobile; food & agricultural products; medical equipment & medical care products, trade in services (tourism, education, emerging technologies, culture, creative design and service outsourcing).

More information and booking details can be found at the official website of the National Exhibition and Convention Center (Shanghai): www.neccsh.com.

If you are interested in participating, contact Flanders Investment & Trade Shanghai, the contact point for Belgiumfor CIIE at shanghai@fitagency.com

We also kindly ask you to send an e-mail to gwenn.sonck@flanders-china.be.

ADVERTISEMENT ANDSPONSORSHIP

Interested in advertisement in the FCCC Weekly or on the FCCC website? Send an e-mail to info@flanders-china.be

FOREIGN INVESTMENT

Xiongan New Area celebrates first anniversary

The Xiongan New Area, about 100 km southwest of Beijing, celebrated its first anniversary, one year after Chinese President Xi Jinping announced the establishment

of the new area on April 1, 2017. It is the third new area of national significance after the Shenzhen Special Economic Zone and the Shanghai Pudong New Area. The Xiongan New Area is being forged into a new benchmark economic zone that will be domestically and globally influential, Chinese analysts said. Xiongan is designed to help the coordinated development of the Beijing-Tianjin-Hebei region and relieve pressure on Beijing by removing some functions that are not essential to a capital city, including some administrative and public institutions, company headquarters, financial institutions, higher education institutions and sci-tech units. Xiongan is expected to explore a novel growth model that differs from the traditional development path of cities, Tian Yun, Director of the China Society of Macroeconomics Research Center, told the Global Times. The development of the new area is considered to be “a crucial strategy for the next millennium,” setting new standards for the building of model economic zones, Tian added.

In less than four months, construction of the new Xiongan Public Services Center, including eight separate buildings, was completed, and since last autumn 260,000 trees have been planted. A further 15 million trees will be added this year. The total planned forest area will reach 67,000 hectares, one-third of the Xiongan New Area. Together withthe wetland of Baiyangdian, 70% of the new area will be covered with water or trees. In building the Xiongan center, workers reduced construction waste by 80%. Facilities are built to collect and purify rainfall, and workers used more than 30 new environmentally friendly construction technologies. “High-tech, energy-saving, and environmentally friendly are the foundations on which Xiongan is built,” said Ye Jian, a technological supervisor ofthe project.

During the past year, 19 high-tech companies, including Alibaba and Baidu, have signed cooperation agreements with the Xiongan Management Committee, and more than 100 high-tech companies have obtained a commerce registration in Xiongan. Construction on the 93 km railway between Beijing and Xiongan began on February 28. Traveltime will be cut to 30 minutes from the current 80 minutes. Ultimately the Xiongan New Area is projected to cover 2,000 square kilometers with a population of 2 million to 2.5million.

NEWSLETTER 3 APRIL 2018 5

opportunity for enterprises across the world to enter the large Chinese market.

The following sectors will be represented in the Fair:High-end intelligent equipment; consumer electronics & appliances; apparel, accessories & consumer goods; automobile; food & agricultural products; medical equipment & medical care products, trade in services (tourism, education, emerging technologies, culture, creative design and service outsourcing).

More information and booking details can be found at the official website of the National Exhibition and Convention Center (Shanghai): www.neccsh.com.

If you are interested in participating, contact Flanders Investment & Trade Shanghai, the contact point for Belgiumfor CIIE at shanghai@fitagency.com

We also kindly ask you to send an e-mail to gwenn.sonck@flanders-china.be.

ADVERTISEMENT ANDSPONSORSHIP

Interested in advertisement in the FCCC Weekly or on the FCCC website? Send an e-mail to info@flanders-china.be

FOREIGN INVESTMENT

Xiongan New Area celebrates first anniversary

The Xiongan New Area, about 100 km southwest of Beijing, celebrated its first anniversary, one year after Chinese President Xi Jinping announced the establishment

of the new area on April 1, 2017. It is the third new area of national significance after the Shenzhen Special Economic Zone and the Shanghai Pudong New Area. The Xiongan New Area is being forged into a new benchmark economic zone that will be domestically and globally influential, Chinese analysts said. Xiongan is designed to help the coordinated development of the Beijing-Tianjin-Hebei region and relieve pressure on Beijing by removing some functions that are not essential to a capital city, including some administrative and public institutions, company headquarters, financial institutions, higher education institutions and sci-tech units. Xiongan is expected to explore a novel growth model that differs from the traditional development path of cities, Tian Yun, Director of the China Society of Macroeconomics Research Center, told the Global Times. The development of the new area is considered to be “a crucial strategy for the next millennium,” setting new standards for the building of model economic zones, Tian added.

In less than four months, construction of the new Xiongan Public Services Center, including eight separate buildings, was completed, and since last autumn 260,000 trees have been planted. A further 15 million trees will be added this year. The total planned forest area will reach 67,000 hectares, one-third of the Xiongan New Area. Together withthe wetland of Baiyangdian, 70% of the new area will be covered with water or trees. In building the Xiongan center, workers reduced construction waste by 80%. Facilities are built to collect and purify rainfall, and workers used more than 30 new environmentally friendly construction technologies. “High-tech, energy-saving, and environmentally friendly are the foundations on which Xiongan is built,” said Ye Jian, a technological supervisor ofthe project.

During the past year, 19 high-tech companies, including Alibaba and Baidu, have signed cooperation agreements with the Xiongan Management Committee, and more than 100 high-tech companies have obtained a commerce registration in Xiongan. Construction on the 93 km railway between Beijing and Xiongan began on February 28. Traveltime will be cut to 30 minutes from the current 80 minutes. Ultimately the Xiongan New Area is projected to cover 2,000 square kilometers with a population of 2 million to 2.5million.

NEWSLETTER 3 APRIL 2018 6

SHARING SERVICES

GoFun launches cheap car sharing service inShenzhen

GoFun, a car-sharing platform backed by state-owned Shouqi Group, has launched a vehicle sharing service in Shenzhen, with prices even lower than those to share a bicycle. The company put 300 new energy vehicles (NEVs) into service. The rental cost is just CNY1 per kilometer plus CNY0.1 per minute, which works out at about half the cost of using Chinese ride hailing service Didi Chuxing. However, new customers can take advantage of a special deal of CNY1 for three hours of driving, which is even cheaper than bike-sharing services in the city. “It is a common strategy for technology companies to use low prices or even free services to attract new users,” said Zhao Ziming, Senior Analyst at Beijing-based consultancy Cyzone. “The price will go back to normal when the companies gain a certain market share.”

Carmakers like Shouqi Group are looking to develop vehicle sharing services based on the assumption that future consumers would rather make short-term use of those assets than owning them outright. In February, Didi Chuxing teamed up with 12 Chinese carmakers to develop an electric-vehicle sharing platform. Shenzhen has a high demand for shared vehicles because only one in 300 people with driving licenses can obtain the hard to get license plates needed to purchase vehicles, said Tan Yi, Chief Operating Officer (COO) of GoFun. After launching vehicle-sharing operations in more than 40 Chinese cities, GoFun now has 1 million monthly active users. At airports and railway stations in China it is often easier to rent a car for a ride home as there are always long queues at the taxi stands.

Shouqi said it will have 1,000 vehicles on the road in the city by the end of this year and will rent more dedicated GoFun parking spaces. A report from Dongxing Securities said the sharing-vehicle business requires high initial investment and operating cost, so most players won’t makea profit in the current environment. “Those who can lower the vehicle production cost or who have cutting-edge technology are more likely to win out,” said the report, which expects the shared vehicle market in China to be worth CNY9.28 billion in 2020, up from CNY820 million in 2017. Unlike China’s ride hailing market which is dominatedby Didi Chuxing, there is currently no strong leader in vehicle sharing, the South China Morning Post reports.

FINANCE

Anbang’s former Chairman Wu Xiaohui goes ontrial

Wu Xiaohui, who founded Anbang Group, has been puton trial in Shanghai, the first among China’s entrepreneurs to be prosecuted amid the government’s current crackdown on financial irregularities. The China Insurance Regulatory Commission (CIRC) removed him from his position as Chairman on February 23. He is on trialat the No 1 Intermediate People’s Court in Shanghai on charges of illegal fundraising, fraud, and embezzlement. Anbang had raised capital through selling wealth management insurance policies to 10.56 million policy holders, exceeding the regulator’s approved quota byCNY723.87 billion, according to the court. An estimated CNY65.25 billion of funds were diverted to Wu’s personal accounts for paying debt and for spending, the court said. Another CNY10 billion of insurance premium income was transferred to his personal company under Wu’s instructions in 2007 and 2011. Prosecutors said Wu owned and controlled more than 200 companies which were little-known to others and that he had increased his stake in

NEWSLETTER 3 APRIL 2018 6

SHARING SERVICES

GoFun launches cheap car sharing service inShenzhen

GoFun, a car-sharing platform backed by state-owned Shouqi Group, has launched a vehicle sharing service in Shenzhen, with prices even lower than those to share a bicycle. The company put 300 new energy vehicles (NEVs) into service. The rental cost is just CNY1 per kilometer plus CNY0.1 per minute, which works out at about half the cost of using Chinese ride hailing service Didi Chuxing. However, new customers can take advantage of a special deal of CNY1 for three hours of driving, which is even cheaper than bike-sharing services in the city. “It is a common strategy for technology companies to use low prices or even free services to attract new users,” said Zhao Ziming, Senior Analyst at Beijing-based consultancy Cyzone. “The price will go back to normal when the companies gain a certain market share.”

Carmakers like Shouqi Group are looking to develop vehicle sharing services based on the assumption that future consumers would rather make short-term use of those assets than owning them outright. In February, Didi Chuxing teamed up with 12 Chinese carmakers to develop an electric-vehicle sharing platform. Shenzhen has a high demand for shared vehicles because only one in 300 people with driving licenses can obtain the hard to get license plates needed to purchase vehicles, said Tan Yi, Chief Operating Officer (COO) of GoFun. After launching vehicle-sharing operations in more than 40 Chinese cities, GoFun now has 1 million monthly active users. At airports and railway stations in China it is often easier to rent a car for a ride home as there are always long queues at the taxi stands.

Shouqi said it will have 1,000 vehicles on the road in the city by the end of this year and will rent more dedicated GoFun parking spaces. A report from Dongxing Securities said the sharing-vehicle business requires high initial investment and operating cost, so most players won’t makea profit in the current environment. “Those who can lower the vehicle production cost or who have cutting-edge technology are more likely to win out,” said the report, which expects the shared vehicle market in China to be worth CNY9.28 billion in 2020, up from CNY820 million in 2017. Unlike China’s ride hailing market which is dominatedby Didi Chuxing, there is currently no strong leader in vehicle sharing, the South China Morning Post reports.

FINANCE

Anbang’s former Chairman Wu Xiaohui goes ontrial

Wu Xiaohui, who founded Anbang Group, has been puton trial in Shanghai, the first among China’s entrepreneurs to be prosecuted amid the government’s current crackdown on financial irregularities. The China Insurance Regulatory Commission (CIRC) removed him from his position as Chairman on February 23. He is on trialat the No 1 Intermediate People’s Court in Shanghai on charges of illegal fundraising, fraud, and embezzlement. Anbang had raised capital through selling wealth management insurance policies to 10.56 million policy holders, exceeding the regulator’s approved quota byCNY723.87 billion, according to the court. An estimated CNY65.25 billion of funds were diverted to Wu’s personal accounts for paying debt and for spending, the court said. Another CNY10 billion of insurance premium income was transferred to his personal company under Wu’s instructions in 2007 and 2011. Prosecutors said Wu owned and controlled more than 200 companies which were little-known to others and that he had increased his stake in

NEWSLETTER 3 APRIL 2018 7

Anbang with investments from these companies to have “absolute control” over the group. His stake in Anbang had reached 98.22% by the end of 2014 after more than 30 of his companies injected CNY49.9 billion in additional capital.Prosecutors said Wu ordered senior executives to go abroad and destroy information so as to cover up his crimes after he was told of a police investigation in March last year. “He severely destroyed the financial order and impacted the country’s financial safety,” prosecutors said.

In his defense, Wu said that he did not understand Chineselaw, and that he did not know whether his actions constituted crimes that could be punishable. Moreover, he disputed that Anbang had breached the regulatory quota. Acrime involving such financial magnitude could result in life imprisonment, said Benben Law Firm’s Attorney Liu Guohua in Guangzhou, who isn’t involved in Anbang’s case. A verdict will be announced later.

Anbang was one of the biggest sellers of wealth management products that were used to finance hostile takeovers and acquisitions. Anbang’s daily operations havebeen taken over by the China Banking and Insurance Regulatory Commission (CBIRC) for one year, which is seeking new investors. Anbang, founded in 2004, had grown from a seller of car insurance policies into one of China’s largest insurance providers, with more than CNY800 billion in assets in a little over a decade.

Anbang became famous in 2014 with the USD2 billion acquisition of the Waldorf Astoria hotel in New York from the Blackstone Group. Two years later, Anbang made an unsolicited USD14 billion bid to buy Starwood Hotels and Resorts Worldwide against the Marriott Group, which it finally lost. Between 2012 and 2016, Anbang had been involved in 14 acquisitions valued at USD25.22 billion.

CHINA NEWS ROUND-UP

U.S. ‘lacks evidence’ for forced tech transfersclaim against China at WTO

It will be difficult for the United States to find evidence to hand to the World Trade Organization (WTO) proving its claim that the Chinese government demanded forced technology transfers and other unfair intellectual property practices, according to the South China Morning Post. The two sides may also reach an agreement on how to improve intellectual property rules before they enter formal proceedings at the WTO. Washington filed a request on

March 23 for consultations with China at the WTO to address what the U.S. alleges are discriminatory Chinese technology licensing requirements, in line with unilateral actions signed off by U.S. President Donald Trump targeting China’s hi-tech industries.

Under WTO rules, consensus could be reached by the two nations during a 60-day consultation period, and legal experts said China could amend its IP laws in that window. Jin Haijun, Law Professor at Renmin University, said the U.S. was mainly relying on the assessments of research agencies and surveys by industry groups, but it would be difficult to prove that technology transfers had been made mandatory by the Chinese government. Complaints from foreign companies about being pressured into transferring technology to Chinese partners are one of the reasons Trump said the U.S. would impose hefty tariffs on Chinese products. “The U.S. is mainly concerned about mandatory technology transfers, especially in industries listed as priorities in the ‘Made in China 2025’ strategy, but it lacks evidence and analysis – which should be based on reliable methodology,” Jin said.

Meanwhile, China has tightened scrutiny over intellectual property transfers to foreign investors citing national security concerns. Under new guidelines issued by the State Council, technology exports and IP transfers that are part of acquisitions made by foreign firms involving patents,integrated circuit layout design, computer software copyright and certain agricultural technology will be subject to national security checks.

On the trade dispute between the two countries, State Councilor and Minister of Foreign Affairs Wang Yi said that protectionism will mean closing the door into China. “Opening up should work both ways. China opens itself to other countries and hopes others will be open to China. Any unilateral or protectionist measures are an approach against the trend of history, will go nowhere and will see their own interests undermined. Protectionism equals shutting the door into China, and they will suffer the consequences of their actions. Both time and facts will prove it,” he said.

China on April 2 imposed tariffs of up to 15% on 120 U.S. products, including fruits, in retaliation to U.S. duties on steel and aluminum. Another eight products, including pork,will now be subject to tariffs of 25%. The total import value of the products is USD3 billion.

NEWSLETTER 3 APRIL 2018 7

Anbang with investments from these companies to have “absolute control” over the group. His stake in Anbang had reached 98.22% by the end of 2014 after more than 30 of his companies injected CNY49.9 billion in additional capital.Prosecutors said Wu ordered senior executives to go abroad and destroy information so as to cover up his crimes after he was told of a police investigation in March last year. “He severely destroyed the financial order and impacted the country’s financial safety,” prosecutors said.

In his defense, Wu said that he did not understand Chineselaw, and that he did not know whether his actions constituted crimes that could be punishable. Moreover, he disputed that Anbang had breached the regulatory quota. Acrime involving such financial magnitude could result in life imprisonment, said Benben Law Firm’s Attorney Liu Guohua in Guangzhou, who isn’t involved in Anbang’s case. A verdict will be announced later.

Anbang was one of the biggest sellers of wealth management products that were used to finance hostile takeovers and acquisitions. Anbang’s daily operations havebeen taken over by the China Banking and Insurance Regulatory Commission (CBIRC) for one year, which is seeking new investors. Anbang, founded in 2004, had grown from a seller of car insurance policies into one of China’s largest insurance providers, with more than CNY800 billion in assets in a little over a decade.

Anbang became famous in 2014 with the USD2 billion acquisition of the Waldorf Astoria hotel in New York from the Blackstone Group. Two years later, Anbang made an unsolicited USD14 billion bid to buy Starwood Hotels and Resorts Worldwide against the Marriott Group, which it finally lost. Between 2012 and 2016, Anbang had been involved in 14 acquisitions valued at USD25.22 billion.

CHINA NEWS ROUND-UP

U.S. ‘lacks evidence’ for forced tech transfersclaim against China at WTO

It will be difficult for the United States to find evidence to hand to the World Trade Organization (WTO) proving its claim that the Chinese government demanded forced technology transfers and other unfair intellectual property practices, according to the South China Morning Post. The two sides may also reach an agreement on how to improve intellectual property rules before they enter formal proceedings at the WTO. Washington filed a request on

March 23 for consultations with China at the WTO to address what the U.S. alleges are discriminatory Chinese technology licensing requirements, in line with unilateral actions signed off by U.S. President Donald Trump targeting China’s hi-tech industries.

Under WTO rules, consensus could be reached by the two nations during a 60-day consultation period, and legal experts said China could amend its IP laws in that window. Jin Haijun, Law Professor at Renmin University, said the U.S. was mainly relying on the assessments of research agencies and surveys by industry groups, but it would be difficult to prove that technology transfers had been made mandatory by the Chinese government. Complaints from foreign companies about being pressured into transferring technology to Chinese partners are one of the reasons Trump said the U.S. would impose hefty tariffs on Chinese products. “The U.S. is mainly concerned about mandatory technology transfers, especially in industries listed as priorities in the ‘Made in China 2025’ strategy, but it lacks evidence and analysis – which should be based on reliable methodology,” Jin said.

Meanwhile, China has tightened scrutiny over intellectual property transfers to foreign investors citing national security concerns. Under new guidelines issued by the State Council, technology exports and IP transfers that are part of acquisitions made by foreign firms involving patents,integrated circuit layout design, computer software copyright and certain agricultural technology will be subject to national security checks.

On the trade dispute between the two countries, State Councilor and Minister of Foreign Affairs Wang Yi said that protectionism will mean closing the door into China. “Opening up should work both ways. China opens itself to other countries and hopes others will be open to China. Any unilateral or protectionist measures are an approach against the trend of history, will go nowhere and will see their own interests undermined. Protectionism equals shutting the door into China, and they will suffer the consequences of their actions. Both time and facts will prove it,” he said.

China on April 2 imposed tariffs of up to 15% on 120 U.S. products, including fruits, in retaliation to U.S. duties on steel and aluminum. Another eight products, including pork,will now be subject to tariffs of 25%. The total import value of the products is USD3 billion.

NEWSLETTER 3 APRIL 2018 8

Tencent remains China’s most valuable brand

Tencent has retained the title of China’s most valuable brand for the fourth time, valued at USD132.2 billion, as the combined value of the top 100 brands in China jumped 23% to a total of USD557.1 billion, the largest annual increase since “BrandZ Top 100 Most Valuable Chinese Brands” was first published in 2014. Education, logistics and technology brands continue to gain in value as a result of the Chinese people’s pursuit of higher qualifications, e-commerce and urbanization of inland regions. “The game ischanging for brands that want to compete successfully in China,” said David Roth, CEO of Europe, the Middle East, Africa and Asia for WPP’s global retail practice. “The country’s leadership expects brands to pursue a higher purpose: one that improves the lives of Chinese people, helps drive greater economic equality and strengthens the nation.”

“Chinese consumers are also more sophisticated in their purchasing decisions and they are responding to brands that grab their attention and meet their needs in relevant ways, with products and services that are both innovative and different,” he added. Five logistics brands entered the top 100 ranking for the first time as courier services rose amid the e-commerce boom. SF Express ranked the highest at the 11th spot. Alibaba saw its brand value surge 53% from a year ago to USD88.6 billion. Overall, the combined value of China’s top 100 brands climbed 80%over the past five years, outpacing the global average growth of 27%. The fast shifting competitive landscape in China also saw some brands fall out of the top 100 rankings. Tencent, Alibaba Group, China Mobile, ICBC, Baidu, Huawei, Moutai, Ping’an, CCB, and AgBank make up the Top 10, the Shanghai Daily reports.

Chinese banks and airlines report rising profits

China’s big state-owned banks’ profits rebounded in 2017 thanks to an accelerating domestic economy. The Industrial and Commercial Bank of China (ICBC), the world’s biggest lender by total assets, said full-year profit grew 2.8% to CNY286.05 billion. The Agricultural Bank of China (AgBank) said its net income rose 4.9% to CNY182.97 billion. Analysts said the big banks are benefiting from the Chinese government’s campaign to clean up bad loans and risky lending. The crackdown is seen as hitting smaller lenders and wealth management companies hardest, driving companies to seek loans from the established banks in order to clean up their balance

sheets. The big banks’ profit growth was largely flat in the preceding two years as concerns grew over rising bad loans. But both ICBC and AgBank reported lower non-performing loans for 2017. Bank of China (BOC) and Bank of Communications (BoCom) also reported a better than expected result. Bank of China, the country’s fourth-largest bank by assets, reported a net profit of CNY172.41 billion for 2017, up 4.7% on the previous year. Bank of China (Hong Kong), the lender’s local arm in Hong Kong, reporteda result of HKD28.48 billion for 2017, up 16%. Bank of Communications, the fifth-biggest mainland bank in terms of assets, reported a profit of CNY70.22 billion for 2017, an improvement of 4.5% over 2016.

Major airlines in China reported strong growth in annual profits as surging travel demand and yuan appreciation helped offset adverse factors such as rising oilprices. China Eastern reported a sales revenue of CNY101.7 billion in 2017, up 3.21% year-on-year, while its net profit reached CNY6.35 billion, surging 40.91%. In 2017, Air China’s sales revenue reached CNY121.36 billion, up 7.71% year-on-year. Its net profit grew 6.26% to CNY7.24 billion, the strongest profit growth since 2011. China Southern Airlines, the country’s largest carrier by passenger traffic, reported it achieved operating revenue of CNY127.8 billion, up 11.15% year-on-year, as its net profit reached CNY5.96 billion, jumping 18.18% year-on-year. Hainan Airlines reported a 47.26% gain in revenue to CNY59.9 billion, and its net profit grew 13.83% to CNY3.88 billion. By 2024, the demand for passenger air transport in China will exceed that of the United States, and China will become the largest air passenger market in the world, the International Air Transport Association (IATA) forecasted.

China’s major industrial firms also posted rapid profit growth in the first two months of this year, the National Bureau of Statistics (NBS) said. Profits of medium and large industrial enterprises gained 16.1% year-on-year fromthe same two-month period last year to CNY969 billion. Profits of major state-owned industrial companies surged 29.6% year-on-year to CNY291.81 billion in the January-February period. The profit margin of industrial companies in their main businesses rose 0.33 percentage points year- on-year to 6.1% during the two-month period. NBS data showed that 29 out of the 41 industries surveyed posted year-on-year profit growth in the two months.

In March, growth in China’s manufacturing sector picked upmore than expected as the official purchasing managers’ index (PMI) rose to 51.5 from 50.3 in February.

NEWSLETTER 3 APRIL 2018 8

Tencent remains China’s most valuable brand

Tencent has retained the title of China’s most valuable brand for the fourth time, valued at USD132.2 billion, as the combined value of the top 100 brands in China jumped 23% to a total of USD557.1 billion, the largest annual increase since “BrandZ Top 100 Most Valuable Chinese Brands” was first published in 2014. Education, logistics and technology brands continue to gain in value as a result of the Chinese people’s pursuit of higher qualifications, e-commerce and urbanization of inland regions. “The game ischanging for brands that want to compete successfully in China,” said David Roth, CEO of Europe, the Middle East, Africa and Asia for WPP’s global retail practice. “The country’s leadership expects brands to pursue a higher purpose: one that improves the lives of Chinese people, helps drive greater economic equality and strengthens the nation.”

“Chinese consumers are also more sophisticated in their purchasing decisions and they are responding to brands that grab their attention and meet their needs in relevant ways, with products and services that are both innovative and different,” he added. Five logistics brands entered the top 100 ranking for the first time as courier services rose amid the e-commerce boom. SF Express ranked the highest at the 11th spot. Alibaba saw its brand value surge 53% from a year ago to USD88.6 billion. Overall, the combined value of China’s top 100 brands climbed 80%over the past five years, outpacing the global average growth of 27%. The fast shifting competitive landscape in China also saw some brands fall out of the top 100 rankings. Tencent, Alibaba Group, China Mobile, ICBC, Baidu, Huawei, Moutai, Ping’an, CCB, and AgBank make up the Top 10, the Shanghai Daily reports.

Chinese banks and airlines report rising profits

China’s big state-owned banks’ profits rebounded in 2017 thanks to an accelerating domestic economy. The Industrial and Commercial Bank of China (ICBC), the world’s biggest lender by total assets, said full-year profit grew 2.8% to CNY286.05 billion. The Agricultural Bank of China (AgBank) said its net income rose 4.9% to CNY182.97 billion. Analysts said the big banks are benefiting from the Chinese government’s campaign to clean up bad loans and risky lending. The crackdown is seen as hitting smaller lenders and wealth management companies hardest, driving companies to seek loans from the established banks in order to clean up their balance

sheets. The big banks’ profit growth was largely flat in the preceding two years as concerns grew over rising bad loans. But both ICBC and AgBank reported lower non-performing loans for 2017. Bank of China (BOC) and Bank of Communications (BoCom) also reported a better than expected result. Bank of China, the country’s fourth-largest bank by assets, reported a net profit of CNY172.41 billion for 2017, up 4.7% on the previous year. Bank of China (Hong Kong), the lender’s local arm in Hong Kong, reporteda result of HKD28.48 billion for 2017, up 16%. Bank of Communications, the fifth-biggest mainland bank in terms of assets, reported a profit of CNY70.22 billion for 2017, an improvement of 4.5% over 2016.

Major airlines in China reported strong growth in annual profits as surging travel demand and yuan appreciation helped offset adverse factors such as rising oilprices. China Eastern reported a sales revenue of CNY101.7 billion in 2017, up 3.21% year-on-year, while its net profit reached CNY6.35 billion, surging 40.91%. In 2017, Air China’s sales revenue reached CNY121.36 billion, up 7.71% year-on-year. Its net profit grew 6.26% to CNY7.24 billion, the strongest profit growth since 2011. China Southern Airlines, the country’s largest carrier by passenger traffic, reported it achieved operating revenue of CNY127.8 billion, up 11.15% year-on-year, as its net profit reached CNY5.96 billion, jumping 18.18% year-on-year. Hainan Airlines reported a 47.26% gain in revenue to CNY59.9 billion, and its net profit grew 13.83% to CNY3.88 billion. By 2024, the demand for passenger air transport in China will exceed that of the United States, and China will become the largest air passenger market in the world, the International Air Transport Association (IATA) forecasted.

China’s major industrial firms also posted rapid profit growth in the first two months of this year, the National Bureau of Statistics (NBS) said. Profits of medium and large industrial enterprises gained 16.1% year-on-year fromthe same two-month period last year to CNY969 billion. Profits of major state-owned industrial companies surged 29.6% year-on-year to CNY291.81 billion in the January-February period. The profit margin of industrial companies in their main businesses rose 0.33 percentage points year- on-year to 6.1% during the two-month period. NBS data showed that 29 out of the 41 industries surveyed posted year-on-year profit growth in the two months.

In March, growth in China’s manufacturing sector picked upmore than expected as the official purchasing managers’ index (PMI) rose to 51.5 from 50.3 in February.

NEWSLETTER 3 APRIL 2018 9

China’s biggest courier firm to deliver parcels bydrone

Chinese courier company SF Holding has won a license to operate drones, opening up a new package delivery method. SF, the nation’s largest listed courier provider by market value and parent of SF Express, said it was now legally able to operate logistics drones. The rise of e-commerce and mobile payments has dramatically increased the number of packages to be delivered to customers nationwide. More than 40 billion parcels were shipped in mainland China last year – about 110 million packages a day – and volumes are expected to reach 49 billion parcels this year, according to the State Post Bureau,China’s delivery-industry watchdog.

Delivery firms have been eyeing the use of logistics drones since about 2015, when Alibaba Group Holding partnered with Shanghai YTO Express Logistics in a one-time test – delivering packages of ginger tea by drone. Rival online retailer JD.com, which has its own delivery service, was reported to have started making drone deliveries last year after testing the service in some rural areas in 2016. Nasdaq-listed JD.com launched what was likely the world’s first commercial drone delivery program for e-commerce in rural locations outside Beijing, as well as in the provinces ofJiangsu, Shaanxi and Sichuan. JD.com said it had a fleet ofmore than 30 custom-built drones when it initiated the service in November 2016. Those drones were designed to transport and deliver packages weighing between 5 to 15 kilos and cover distances up to 50 kilometers.

Vice Premier Liu He tells regulators to focus onfinancial risk

China’s Vice Premier Liu He has told a new team of regulators that the prevention of risks in the country’s financial sector is to be the top priority. Liu said China also needs to deepen financial reforms and further open upthe sector, with market forces playing a more prominent role. “To win the battle against financial risks is a priority of the country’s current financial work,” said Liu, an Economic Adviser to President Xi Jinping who was promoted to Vice Premier in March. China is among global economies viewed as most vulnerable to a banking crisis, according to the Bank for International Settlements (BIS), but the government says that debt risks are under control, and its commitment to deleveraging will not waver. “Liu is a critic ofthe debt-fueled program that China adopted following the global financial crisis, or at least feels that it has continued

for too long and that government stimulus cannot be the main driver of growth,” said Tony Saich of the Harvard’s Kennedy School of Government.

Liu He told officials at the People’s Bank of China (PBOC) and the China Banking and Insurance Regulatory Commission (CBIRC) that the monetary policy should be prudent and neutral and ensure reasonable and stable liquidity in the financial system. A campaign targeting high corporate debt has already embroiled several high-profile companies including Anbang and HNA Group.

City of London setting up ‘green’ finance centerto finance Xiongan and Belt and Road projects

The City of London has set up a “green finance center”with a Chinese partner to fund sustainable development projects, and the first beneficiary may be Xiongan, a new city in Hebei province that is to take over some functions from Beijing and is to become one of the three centers in the Beijing-Tianjin-Xiongan triangle. London’s financial district is eager to increase its business links with China as the Brexit negotiations continue. The center will work with the China Green Finance Committee to develop financial products to help fund a number of projects, including some under the Belt and Road Initiative, according to Lord Mayor of London Charles Bowman.

“We’ve decided the perfect first project to do is the Xiongan New Area. The United Kingdom has significant strength and expertise in smart city development, particularly in design, research and finance of engineering services,” Bowman said. He added that he led a 100-strong delegation on a field visit to Xiongan in March and had held“productive” talks with local officials on detailed projects. The Canary Wharf Group, which helped build a new financial center east of the City of London, is already liaising with local governments in China, he said.

“As we build a new city, there will be many buildings and infrastructure, all of which will need investment from green finance, so Xiongan can become a role model for other Chinese cities and those along the Belt and Road,” said MaJun, Director of the Green Finance Committee at the China Society for Finance and Banking. “It needs a variety of financial support, such as green credit, green bonds, green funds and low-carbon finance. There should be many greenprivate equity firms and venture capital firms in Xiongan as well,” he added, as reported by the South China Morning Post.

NEWSLETTER 3 APRIL 2018 9

China’s biggest courier firm to deliver parcels bydrone

Chinese courier company SF Holding has won a license to operate drones, opening up a new package delivery method. SF, the nation’s largest listed courier provider by market value and parent of SF Express, said it was now legally able to operate logistics drones. The rise of e-commerce and mobile payments has dramatically increased the number of packages to be delivered to customers nationwide. More than 40 billion parcels were shipped in mainland China last year – about 110 million packages a day – and volumes are expected to reach 49 billion parcels this year, according to the State Post Bureau,China’s delivery-industry watchdog.

Delivery firms have been eyeing the use of logistics drones since about 2015, when Alibaba Group Holding partnered with Shanghai YTO Express Logistics in a one-time test – delivering packages of ginger tea by drone. Rival online retailer JD.com, which has its own delivery service, was reported to have started making drone deliveries last year after testing the service in some rural areas in 2016. Nasdaq-listed JD.com launched what was likely the world’s first commercial drone delivery program for e-commerce in rural locations outside Beijing, as well as in the provinces ofJiangsu, Shaanxi and Sichuan. JD.com said it had a fleet ofmore than 30 custom-built drones when it initiated the service in November 2016. Those drones were designed to transport and deliver packages weighing between 5 to 15 kilos and cover distances up to 50 kilometers.

Vice Premier Liu He tells regulators to focus onfinancial risk

China’s Vice Premier Liu He has told a new team of regulators that the prevention of risks in the country’s financial sector is to be the top priority. Liu said China also needs to deepen financial reforms and further open upthe sector, with market forces playing a more prominent role. “To win the battle against financial risks is a priority of the country’s current financial work,” said Liu, an Economic Adviser to President Xi Jinping who was promoted to Vice Premier in March. China is among global economies viewed as most vulnerable to a banking crisis, according to the Bank for International Settlements (BIS), but the government says that debt risks are under control, and its commitment to deleveraging will not waver. “Liu is a critic ofthe debt-fueled program that China adopted following the global financial crisis, or at least feels that it has continued

for too long and that government stimulus cannot be the main driver of growth,” said Tony Saich of the Harvard’s Kennedy School of Government.

Liu He told officials at the People’s Bank of China (PBOC) and the China Banking and Insurance Regulatory Commission (CBIRC) that the monetary policy should be prudent and neutral and ensure reasonable and stable liquidity in the financial system. A campaign targeting high corporate debt has already embroiled several high-profile companies including Anbang and HNA Group.

City of London setting up ‘green’ finance centerto finance Xiongan and Belt and Road projects

The City of London has set up a “green finance center”with a Chinese partner to fund sustainable development projects, and the first beneficiary may be Xiongan, a new city in Hebei province that is to take over some functions from Beijing and is to become one of the three centers in the Beijing-Tianjin-Xiongan triangle. London’s financial district is eager to increase its business links with China as the Brexit negotiations continue. The center will work with the China Green Finance Committee to develop financial products to help fund a number of projects, including some under the Belt and Road Initiative, according to Lord Mayor of London Charles Bowman.

“We’ve decided the perfect first project to do is the Xiongan New Area. The United Kingdom has significant strength and expertise in smart city development, particularly in design, research and finance of engineering services,” Bowman said. He added that he led a 100-strong delegation on a field visit to Xiongan in March and had held“productive” talks with local officials on detailed projects. The Canary Wharf Group, which helped build a new financial center east of the City of London, is already liaising with local governments in China, he said.

“As we build a new city, there will be many buildings and infrastructure, all of which will need investment from green finance, so Xiongan can become a role model for other Chinese cities and those along the Belt and Road,” said MaJun, Director of the Green Finance Committee at the China Society for Finance and Banking. “It needs a variety of financial support, such as green credit, green bonds, green funds and low-carbon finance. There should be many greenprivate equity firms and venture capital firms in Xiongan as well,” he added, as reported by the South China Morning Post.

NEWSLETTER 3 APRIL 2018 10

Chinese developers lower growth expectationsfor 2018

Top Chinese developers have set modest sales targets for this year amid a less sanguine outlook under financial restrictions introduced by Beijing, and the pursuit of better margins. China Evergrande has set a target of CNY550 billion, compared with the CNY501 billion it made last year. China Overseas is targeting HKD290 billion, on the back of HKD232.07 billion last year. Country Garden, China’s largest developer by sales value, earlier revealed no specific sales target for this year, and only said it would try its best. “If we seek CNY800 billion in sales this year, it is also possible. But it is unnecessary, because we have said we want to focus on profitability,” Hui Ka-yan, Chairman of Evergrande, said after the company’s results were released.

Gaining from a property boom in China last year, particularly in tier-three and tier-four cities, 10 of the country’s biggest developers by market capitalization have reported an average increase of 56% in contracted sales, but the industry consensus is that it was less likely to maintain this momentum in 2018, because of strict buying restrictions and credit tightening. Most listed developers have flagged this risk in their annual results. “The macro environment is definitely a factor that will make it difficult to keep the same pace,” said Alan Jin, Property Analyst with Mizuho Securities. “For top developers it is easier to maintain the same sales volume. But it is a big question mark if they can keep the pre-sales margins this year, especially entering into the second half.” “Evergrande’s goal is more related to a shift in its own strategy. While for state-owned China Overseas, it has kept a pace of 20% to 30% growth in sales over the past years, except when it had large merger and acquisition deals,” said Toni Ho, Property Analyst with RHB OSK Securities.

When asked if the target for 2018 was too conservative, Yan Jianguo, Chairman of China Overseas, said the target was set because of two reasons: tightening credit and the company’s own sales plan. Many of its projects will be sold in the second half of 2018, the fourth quarter in particular, which provides a rather short selling period, the South China Morning Post reports.

But even if the momentum in sales and profitability weakens this year, analysts said this will not affect companies’ 2018 results, as these results will be supported by the solid contracted sales of 2017. This year’scontracted sales should affect results of 2019 onwards.

Shanghai to simplify business registration

The Shanghai authorities plan to reduce the time needed to set up a new company in the city. They will launch a new online platform which will allow to complete some regulatory procedures in just six days, down from the current 22 days. The Director of the Shanghai Developmentand Reform Commission Ma Chunlei said the city was implementing business reforms in line with the World Bank’s latest “Doing Business 2018” report, released last October. Previously, setting up a business in the city needed several governmental bodies to be involved – including the tax, administrative and commerce bureaus, and the police – all with their own regulatory procedures and formalities.

Using the new platform, new businesses will only need to go to “one window”, said Ma, with those various entities set to work closer together, sharing data to facilitate more seamless procedures. Businesses will have “the final say” on whether the planned reforms are being effective or not, Ma added, and the city will also set up a designated office to further fine-tune its business-related processes. China was listed 78th of 190 major destinations covered by the Doing Business 2018 report, which measures the ease of doing business based on a series of measurements including gaining construction permits, getting electricity connected, registering property, paying tax and enforcing contracts. New Zealand was ranked top, with Hong Kong and the U.S. coming in fifth and sixth, respectively.

More than 350,000 new companies were registered in Shanghai in 2017, a 1.9% annual rise, of which 8,020 were foreign-funded, a 2.5% fall on 2016.

In another sign that Shanghai is expanding its reputation asa financial center, the Central Commission for Comprehensive Reforms has endorsed a plan to establisha specialized court for finance in the city, to “better serve the real economy, ward off financial risks and deepenfinancial reforms”. Tribunals that specialize in financial offenses and finance-related civil cases at all levels of the city’s courts will be merged to set up the Shanghai Finance Court.

NEWSLETTER 3 APRIL 2018 10

Chinese developers lower growth expectationsfor 2018

Top Chinese developers have set modest sales targets for this year amid a less sanguine outlook under financial restrictions introduced by Beijing, and the pursuit of better margins. China Evergrande has set a target of CNY550 billion, compared with the CNY501 billion it made last year. China Overseas is targeting HKD290 billion, on the back of HKD232.07 billion last year. Country Garden, China’s largest developer by sales value, earlier revealed no specific sales target for this year, and only said it would try its best. “If we seek CNY800 billion in sales this year, it is also possible. But it is unnecessary, because we have said we want to focus on profitability,” Hui Ka-yan, Chairman of Evergrande, said after the company’s results were released.

Gaining from a property boom in China last year, particularly in tier-three and tier-four cities, 10 of the country’s biggest developers by market capitalization have reported an average increase of 56% in contracted sales, but the industry consensus is that it was less likely to maintain this momentum in 2018, because of strict buying restrictions and credit tightening. Most listed developers have flagged this risk in their annual results. “The macro environment is definitely a factor that will make it difficult to keep the same pace,” said Alan Jin, Property Analyst with Mizuho Securities. “For top developers it is easier to maintain the same sales volume. But it is a big question mark if they can keep the pre-sales margins this year, especially entering into the second half.” “Evergrande’s goal is more related to a shift in its own strategy. While for state-owned China Overseas, it has kept a pace of 20% to 30% growth in sales over the past years, except when it had large merger and acquisition deals,” said Toni Ho, Property Analyst with RHB OSK Securities.

When asked if the target for 2018 was too conservative, Yan Jianguo, Chairman of China Overseas, said the target was set because of two reasons: tightening credit and the company’s own sales plan. Many of its projects will be sold in the second half of 2018, the fourth quarter in particular, which provides a rather short selling period, the South China Morning Post reports.

But even if the momentum in sales and profitability weakens this year, analysts said this will not affect companies’ 2018 results, as these results will be supported by the solid contracted sales of 2017. This year’scontracted sales should affect results of 2019 onwards.

Shanghai to simplify business registration

The Shanghai authorities plan to reduce the time needed to set up a new company in the city. They will launch a new online platform which will allow to complete some regulatory procedures in just six days, down from the current 22 days. The Director of the Shanghai Developmentand Reform Commission Ma Chunlei said the city was implementing business reforms in line with the World Bank’s latest “Doing Business 2018” report, released last October. Previously, setting up a business in the city needed several governmental bodies to be involved – including the tax, administrative and commerce bureaus, and the police – all with their own regulatory procedures and formalities.

Using the new platform, new businesses will only need to go to “one window”, said Ma, with those various entities set to work closer together, sharing data to facilitate more seamless procedures. Businesses will have “the final say” on whether the planned reforms are being effective or not, Ma added, and the city will also set up a designated office to further fine-tune its business-related processes. China was listed 78th of 190 major destinations covered by the Doing Business 2018 report, which measures the ease of doing business based on a series of measurements including gaining construction permits, getting electricity connected, registering property, paying tax and enforcing contracts. New Zealand was ranked top, with Hong Kong and the U.S. coming in fifth and sixth, respectively.

More than 350,000 new companies were registered in Shanghai in 2017, a 1.9% annual rise, of which 8,020 were foreign-funded, a 2.5% fall on 2016.

In another sign that Shanghai is expanding its reputation asa financial center, the Central Commission for Comprehensive Reforms has endorsed a plan to establisha specialized court for finance in the city, to “better serve the real economy, ward off financial risks and deepenfinancial reforms”. Tribunals that specialize in financial offenses and finance-related civil cases at all levels of the city’s courts will be merged to set up the Shanghai Finance Court.

NEWSLETTER 3 APRIL 2018 11

Your banner at the FCCC website or newsletter

Companies interested in posting a banner/an advertisement on the FCCC website, FCCC weekly newsletter or bi-weekly sectoral newsletters are kindly invited to contact the FCCC at: info@flanders-china.be

Organisation and founding members of the Flanders-China Chamber of Commerce

Chairman: Mr. Stefaan Vanhooren, President Agfa Graphics, Member of the Executive Committee of the Agfa Gevaert Group, NV THE AGFA-GEVAERT GROUP SAVice-Chairmen: Mr. Bart De Smet, Chief Executive Officer, NV AGEAS SAMr. Philippe Van der Donckt, Director Government Affairs Asia, NV UMICORE SASecretary and Treasurer: Wim Eraly, Senior General Manager, NV KBC Bank SAExecutive Director: Ms. Gwenn Sonck

Members of the Board of Directors and Founding Members:Mr. Stefaan Vanhooren, President Agfa Graphics, Member of the Executive Committee of the Agfa Gevaert Group, NV THE AGFA-GEVAERT GROUP SAMr. Christian Leysen, Executive Chairman, NV AHLERS SAMr. Filip Pintelon, Senior Vice President, GM Healthcare, NV BARCO SAMr. Philip Eyskens, Senior Vice President Legal, IT and M&A, NV BEKAERT SAMr. Philip Hermans, General Manager, NV DEME SAMr. Bart De Smet, Chief Executive Officer, NV AGEAS SAMr. Wim Eraly, Senior General Manager, KBC Bank SAMr. Johan Verstraete, Vice-President Marketing, Sales & Services Weaving Solutions, NV PICANOL SAMr. Philippe Van der Donckt, Director Government Affairs Asia, NV UMICORE SA

Membership rates for 2018 (excl. VAT)

● SMEs: €405 (€490.05 incl. VAT)● Large enterprises: €1,025 (€1,240.25 incl. VAT)

Contact

Flanders-China Chamber of CommerceOffice: Ajuinlei 1, B-9000 Gent – Belgium New telephone and fax numbers: Tel.: +32/9/269.52.46 – Fax: ++32/9/269.52.99E-mail: info@flanders-china.be Website: www.flanders-china.be

Share your story

To send your input for publication in a future newsletter mailto: info@flanders-china.be

The FCCC Newsletters are edited by Michel Lens, who is based in Beijing and can be contacted by e-mail michel.jc.lens@gmail.com . Disclaimer: the views expressed in this newsletter are not necessarily those of the FCCC or its Board of Directors.

NEWSLETTER 3 APRIL 2018 11

Your banner at the FCCC website or newsletter

Companies interested in posting a banner/an advertisement on the FCCC website, FCCC weekly newsletter or bi-weekly sectoral newsletters are kindly invited to contact the FCCC at: info@flanders-china.be

Organisation and founding members of the Flanders-China Chamber of Commerce

Chairman: Mr. Stefaan Vanhooren, President Agfa Graphics, Member of the Executive Committee of the Agfa Gevaert Group, NV THE AGFA-GEVAERT GROUP SAVice-Chairmen: Mr. Bart De Smet, Chief Executive Officer, NV AGEAS SAMr. Philippe Van der Donckt, Director Government Affairs Asia, NV UMICORE SASecretary and Treasurer: Wim Eraly, Senior General Manager, NV KBC Bank SAExecutive Director: Ms. Gwenn Sonck

Members of the Board of Directors and Founding Members:Mr. Stefaan Vanhooren, President Agfa Graphics, Member of the Executive Committee of the Agfa Gevaert Group, NV THE AGFA-GEVAERT GROUP SAMr. Christian Leysen, Executive Chairman, NV AHLERS SAMr. Filip Pintelon, Senior Vice President, GM Healthcare, NV BARCO SAMr. Philip Eyskens, Senior Vice President Legal, IT and M&A, NV BEKAERT SAMr. Philip Hermans, General Manager, NV DEME SAMr. Bart De Smet, Chief Executive Officer, NV AGEAS SAMr. Wim Eraly, Senior General Manager, KBC Bank SAMr. Johan Verstraete, Vice-President Marketing, Sales & Services Weaving Solutions, NV PICANOL SAMr. Philippe Van der Donckt, Director Government Affairs Asia, NV UMICORE SA

Membership rates for 2018 (excl. VAT)

● SMEs: €405 (€490.05 incl. VAT)● Large enterprises: €1,025 (€1,240.25 incl. VAT)

Contact

Flanders-China Chamber of CommerceOffice: Ajuinlei 1, B-9000 Gent – Belgium New telephone and fax numbers: Tel.: +32/9/269.52.46 – Fax: ++32/9/269.52.99E-mail: info@flanders-china.be Website: www.flanders-china.be

Share your story

To send your input for publication in a future newsletter mailto: info@flanders-china.be

The FCCC Newsletters are edited by Michel Lens, who is based in Beijing and can be contacted by e-mail michel.jc.lens@gmail.com . Disclaimer: the views expressed in this newsletter are not necessarily those of the FCCC or its Board of Directors.