The European Union Chamber of Commerce in China held its seventh Annual General Meeting (AGM) on April 3rd in Beijing. Honorary President Ambassador Serge Abou, Head of the Delegation of the European Commission, introduced Mr Gunter Verheugen, vice-president of the European Commission. Over 90 guests representing corporate members of the Chamber attended.

In his speech Mr Verheugen said there have been remarkable positive changes both in Europe and China in building a stronger and more strategic relationship in the past few decades, although the citizens of the two sides do not yet understand each other enough. He added that communicating to the citizens was very important and necessary. After his intensive dialogue in China, he believes that the EU has many unexplored opportunities in China. The EU wants to have much broader scope of cooperation with China, which should not only focus on trade or economic issues but also international cooperation.

During his discussions with Chinese leaders and ministries, it was agreed that there is a need to create strong cooperation in the areas of energy efficiency and environmentally friendly energy technologies. This will help China meet the current challenges, and for EU companies who have the technologies and experience available it can be a win-win situation. He indicated it was his intention to convince the European companies of the great opportunities available.

Mr Verheugen also praised Mr Serge Janssens de Varebeke, the outgoing president of the European Chamber for his achievements, and thanked him for his contribution, energy and enthusiasm to the Chamber. At the same time, he wished his successor the same success.

Mr Janssens presented his report for 2006 highlighting the positive position of the Chamber in terms of lobbying activities, visibility, membership growth, financial resources and cooperation with national chambers. Mr Janssens also took the opportunity to thank all the Chamber staff, the Executive Committee, members of the Chamber, Corporate Sponsors, as well as Ambassador Abou and staff of the EU Delegation, for their invaluable support to the Chamber. In the absence of the Treasurer, he presented the financial report for 2006 and outlook for 2007. Mr Janssens concluded by confirming his continuing support for the Chamber through his participation in the Advisory Council as the appointed representative of Fortis Bank.

Christophe Texier of Mazars confirmed his firm's opinion that the Chamber's financial statements comply with the requirements of the Accounting System for Not-For-Profit and Non-Governmental Organisations, promulgated by the Ministry of Finance of the People's Republic of China and present fairly, in all material aspects, the financial position of the Chamber as at December 31st 2006, and the results of operations and cash flows of the Chamber for the year then ended. In absence of any questions these were approved.

Miguel Ceballos-Baron, economic and commercial counsellor at the Delegation, conducted the elections for the new Executive Committee of the Chamber in his role as Returning Officer.

The candidate for President Joerg Wuttke, the candidates for the three vice-president positions, Mr Jacques de Boiss¨¦son, Mr Giancarlo Grech and Mr Henry Wang presented themselves to the members and their reasons for standing. A similar statement was read on behalf of Carlo Frondaroli, the candidate for the position of treasurer. As they were unopposed, the returning officer, following the members' agreement, declared them duly elected.

Following his election as president, Joerg Wuttke explained that he will focus on strengthening the Working Groups of the Chamber, enhancing bilateral relationships with national Chambers of the European countries and consolidating the Chamber offices after several years of expansion.

In paying tribute to his years of enthusiastic support for the Chamber as a states' representative, a vice-president and finally president, Mr Wuttke presented Mr Janssens with a framed photograph of the Executive Committee to commemorate his last meeting and in appreciation of his many years of support, guidance and development of the Chamber under his stewardship. Following the conclusion of the AGM, members enjoyed a convivial social gathering.

Farewell to former Shanghai Board Members

We wish to sincerely thank outgoing Chairman Dominique de Boiss¨¦son (Alcatel) and his fellow board colleagues Ralph Koppitz (Taylor Wessing), David Chang (Philips) and Marcus Wassmuth (LBBW) for their guidance, strategic input, remarkable dedication and availability. Celebrating their contributions at the election night in the midst of a crowd of corporate members, they received as token of appreciation from the Shanghai team a special edition book presented by Shanghai general manager Thomas Felber. We wish them all the very best for the future.

The private sector and microfinance in China

On May 17th the European Chamber's Corporate Social Responsibility Working Group will be hosting a "CSR Forum" on microfinance in Beijing.

The year 2006 was a milestone year for highlighting microfinance as an effective tool for poverty alleviation. This was acknowledged with the 2006 Nobel Peace Prize being awarded to Professor Mohammad Yunus and Grameen Bank of Bangladesh. As Prof Yunus has demonstrated in his efforts, microfinance can play a fundamental role for the poor to increase income, build sustainable and fruitful businesses, and reduce their vulnerability to external shocks. Furthermore, microfinance has proven to be a powerful instrument for self-empowerment by enabling the poor, in particular women, to become economic agents of change. By providing access to financial resources, microfinance plays an important role in the fight against poverty.

Supporting microfinance is a method by which the private sector can support the United Nations Millennium Development Goal of eradicating poverty. To this end, we are increasingly witnessing a trend whereby companies, who have clearly understood the benefits microfinance programmes offer to alleviate the burden of poverty, incorporate such initiatives into their overall CSR strategies. These companies combine their core business activities with their social commitment to improve community well-being as well as achieving corporate goals.

During the CSR Forum on May 18th, Mr Bai Chengyu, Secretary General of the China MF Association, which is affiliated with the Ministry of Commerce, will join a panel of microfinance experts from civil-society groups and the private sector to discuss the role of microfinance in poverty alleviation in China, current trends, lessons learned, regulatory framework and how the private sector can incorporate such practices into their CSR strategies.

A new partnership at the Chamber

On March 28th COCIR, the European Coordination Committee for Radiological, Electromedical and Healthcare IT Industry and the European Union Chamber of Commerce in China signed a cooperation agreement establishing a dedicated COCIR China desk. Representatives from the industry, trade associations and the Delegation of the European Commission followed the invitation to celebrate this important event. COCIR secretary general Nicole Denjoy said China's ambition of developing a healthcare system that can match the tremendous growth of its economy is a major challenge to the medical industry. COCIR can bring solutions and share its expertise and experience from Europe and other regions.

China is now among the world's biggest markets for medical equipment and continues to grow at a tremendous pace. It is not surprising that with this fast growth many regulatory and economic challenges need be tackled in China.

The desk, managed by Business Manager Maurizio Andreano, will allow COCIR to enhance dialogue and cooperation with the Chinese authorities supporting the development of a transparent and predictable regulatory framework for medical devices in China. In order to bridge policy differences between Europe and China, more information exchanges at a technical level with Chinese authorities are needed. At the same time, it is essential for European companies to work closely with Chinese ministries at all levels and on a more systematic basis. Together with the European Chamber's Healthcare Equipment Working Group and other associations COCIR will address problems such as product registration and encourage the adoption of international standards. COCIR has been the voice of the healthcare and medical IT industry in the European Union since 1959 and is working to develop the future of healthcare in Europe and beyond. COCIR, based in Brussels, represents the interests and activities of its members, global companies and SMEs as well as national trade associations, and acts as a channel for communication between all its members and the European institutions and other global regulatory bodies.

Working Group Elections in Shanghai
Finance & Taxation Working Group (March 14th):
Chair: Dr Michael Pfaar (Ernst & Young)
Vice-Chair: Ho Kiam Kong (Philips) and Simon Tan (Deloitte).

Construction Working Group (March 16th):
Chair: Mr Stephen McCartney (SIP Group)
Vice-Chairs: Mr Terence Wong (Lovells) and Mr Johan Schepens (Arcelor)

Environment Working Group (March 9th):
Chair: Mr Frederic Grivel (SCIP Swire SITA Waste Services)
Vice-Chair: Mr Frederik Cornu (Bureau Veritas)

Banking Working Group (March 6th):
Chair: Mr Pascal Sefrin (Soci¨¦t¨¦ G¨¦n¨¦rale)
Vice-Chair: Mr Carl Van der Elst (Rabobank)

Insurance Working Group
Chair: Mr Hans-Joerg Probst (Allianz)
Vice-Chair: Mr P.Y. Chan (Fortis)

Aviation Working Group
Chair: Mr Michael Burke (Virgin Atlantic)
Vice-Chair: Mr Jan Skuttnabb (Finnair)

Pharmaceutical Working Group meeting (March 16th)
Chair (Beijing): Eric Bouteiller (Ipsen)
Vice-Chair (Shanghai): Christian Grapow (Solvay)

Food and Beverage Working Group (February 14th)
Chair: Xavier Pignel-Dupont (Sopexa)
Vice-Chair: Robin Saby (Metro)

Trade and Distribution Working Group (March 21st):
Chair: Titus Von Dem Bongart (Ernst & Young)
Vice-Chair: Tim Lamb (JLJ)

Chamber Board Elections 2007
Elections were held for the European Chamber's offices around China. Here are the results:

Shanghai

The European Chamber liaison office in Shanghai held its annual Board Elections on March 20th, 2007, presided over by outgoing chairman of the Shanghai Board and vice-president of the Chamber Mr Dominique de Boiss¨¦son, and returning officer and secretary general of the European Chamber Mr Ian Kay. The liaison office in Shanghai welcomes Mr Ho Kiam Kong (Philips) as the new Shanghai representative/vice-president-designate and Mr Herman Vandaele (Bekaert China); Mr Didier Baudrand (BP (China) Holdings Ltd); Dr Richard Zhang (Merck China); and Mr Piter de Jong (ING Bank) as the newly elected board members. The liaison office in Shanghai congratulates all successful board members on their election and looks forward to working with them over the next year. It is anticipated that 2007/8 will continue to see further growth in members, greater diversity in events and further improved quality in the overall service that it offers its members at its new state-of-the-art premises.

PRD

On March 26th, 2007 the European Chamber Pearl River Delta Office held a successful board election with a crowd of distinguished member company representatives. A brief and concise presentation of the European Chamber PRD Office was given by Mrs Francine Hadjisotiriou, general manager of the PRD Office, who reported on the enormous achievement for the established year 2006, pointing out that the Pearl River Delta which covers nine cities in southern China, represents the country's manufacturing pillar. The outlook for the development of European Chamber PRD 2007 is booming and bright.

We are delighted to announce the new board of the European Chamber Pearl River Delta Office 2007: Mr Keith Poon from Siemens, who has been appointed as PRD office chairman, and Mr Cornelius Bakker from Mould Group China, Mr David Wang from BASF, Mr Vivian Desmonts from DS Avocats and Mr Philippe Hamon from SDV.

The Pearl River Delta liaison office congratulates all successful board members on their election and is looking forward to working with them over the next year. The next year should continue to see dynamic growth in members, greater diversity in events and further improved quality in overall service. Nanjing

March 20th saw the third annual board election of the Nanjing Office of the European Chamber. The event provided a valuable opportunity for member companies to have a say in deciding the direction of the Chamber's activities on a local level, while also getting an update on the direction of the organisation with a nationwide focus. The 2007 election saw the standing down of two board members.

Mr Paul Booms (DSM Nanjing Chemical Company Ltd.) and Mr Raymond Li (SAES Getters (Nanjing) Co, Ltd) have supported the Nanjing Office since it was established in 2004 and the Chamber's sincere thanks go to them for their constant support and effort over the past three years. Mr Helmut Guesten was unopposed in his move for re-election as Chairman and we welcome him in for his third term. The voting concluded with the arrival onto the board of Mr Joachim Braem (Richter EP (Nanjing) Co, Ltd) and Mr Christophe Lauras (Sofitel Galaxy Nanjing). We warmly welcome them and look forward to working with them and re-elected board members towards the continued success of the European Chamber in Nanjing.

Tianjin

On March 1st the European Chamber Tianjin Office held its annual board elections at Panshan Restaurant on the second floor of the Sheraton Hotel. We're pleased to announce the new Board of Tianjin Office in 2007: Mr Juan Silvestre (Box Inves), Chairman; Mr Karl-Heinz Buettner (Siemens Electrical Drives); Mr Sandy Reid (Heng An Standard Life); Mr Eric Bouteiller (Beaufour Ipsen (Tianjin); and Mr Dorino Moret (Zanussi Elettromeccanica)

We sincerely welcome more and more members to participate in the Tianjin European Chamber's activities. We strongly believe that our group will continue to grow in 2007.

Chengdu

The European Chamber Chengdu Office successfully held local board elections on March 18th. Five of the candidates were elected to be 2007 board members. As most voters expected, Mr Pascal Hermandesse, (Atexis) returns as chair, and Mr Paul Sives (Proton Products) returns as vice-chair. The other three members are Mr Johnny Browaeys (ERM), Mr Anthony Chau (KPMG) and Mr Yu Weidong (Groupama). All the new board members showed their enthusiasm towards the Chamber mission, contributing to the development of the Chengdu Office and assisting in improving the investing and trading environment of western China.

SME Across Borders networking evening

On March 27th the European Union Chamber of Commerce in China and The American Chamber of Commerce jointly held a successful networking evening for small and medium-sized enterprises. Around 300 members of the European Chamber, American Chamber and other national chambers came together on the evening at Brown's Bar in Beijing to network in a relaxing atmosphere. The aim of the event was to create a networking platform for our members together with other chamber's members. Brown's fit these needs perfectly by providing a nice and relaxed environment needed for networking. It is a good opportunity for the participants to share their views on topics in which they show common interest as well as having a great time. We also hope some business cooperation will be established among the members after this event.

The evening was not only for networking, but we also celebrated the start of the 500-day countdown to the Beijing Olympics. We would like to take this opportunity to thank all of the other chambers that were involved in this event and look forward to working together again.

Ambassador Abou visits PRD The Pearl River Delta European Chamber was delighted to welcome Ambassador Serge Abou of the EU Delegation to Guangzhou on April 9th. The meeting was attended by several distinguished industry leaders, all board members and some members representing the business community.

Mr Abou opened with a brief overview of Europe and commented that the EU Delegation's visit is a reflection of the importance of the Pearl River Delta (PRD) region as a major manufacturing base. He went on to give a positive assessment of the economic relationship between the European Union and China.

During the meeting the corporate representatives took the opportunity to quiz the Ambassador on a number of specific issues which are of particular interest in the PRD. The Ambassador noted the concerns, such as those relating to human resources and intellectual property rights, and agreed to bring them to the attention of the local authorities. The meeting was successful and highly participative. Building on its dynamic growth over the last 10 months, the PRD Office of the European Chamber will continue to push for reforms which will improve the business environment to the mutual benefit of China and European companies with business interests here.

FDI adapts to new landscape

Rules, procedures and regulations are changing fast in China. In the last quarter alone, we have seen several interesting changes at the national level, from VAT refund amendments to Individual Income Tax declaration adjustments and the recent promulgation of the new Corporate Income Tax Law that will come into effect on January 1st, 2008. And we are also waiting on the new Labour Contract Law expected to be promulgated next year. However, regulations at the local level tend to change even faster, and are often the ones that affect investors more and that might determine competitiveness among sectors.

As China's manufacturing centre, the Pearl River Delta is the country's beating heart, hosting direct or indirect production for all kinds of goods and famous brands sold worldwide. The goods, outsourced from domestic companies as well as huge Taiwanese and Hong Kong owned ones - the traditional leading foreign direct investors in mainland China - accounted for 31.2 percent of China's exports in 2006, worth more than US$301.9 billion (?223 billion). The region accounted for almost a quarter of China's foreign direct investment in 2006 with some US$14.5 billion brought in.

Due to growing global competitiveness in the last five years, however, the kinds of investment structures explored by foreign investors have been evolving as fast as China's changing regulations. As the regulations change, often to bring China in line with its WTO commitments, foreign investors have turned to increasing their commitments on the ground as their profit margins have tightened up. Outsourcers have increasingly become more focused on direct production or developing a wider range of related services. Small traders have looked for a more effective presence on the ground, while big traders and distributors have sought full control of logistics, quality control, after-sales services or customs-related matters.

This has meant that small and medium-sized foreign-invested companies present across the PRD, which have often been obliged to relocate production to remain on the market, are facing a daily aggressive competitiveness from domestic companies as well as other foreign-invested companies. Nowadays, there is nothing strange about having two or more leading niche-sector producers - even from the same European country - finding themselves neighbours in the same area. In low-tech sectors such as garments, shoes, leather or simple hardware and electronic-related goods, margins are often so small that reaching maximum efficiency is a must.

As salaries rise, usable industrial land becomes less plentiful, and the quality of the industrial base increases, local governments are declining to approve industries that are not capital-intensive, high-value-added, or environmentally friendly, forcing them elsewhere in the PRD, if not to neighbouring provinces. Some local governments are actually implementing stricter approval measures to change their local industrial base, ranging from increased minimum registered-capital thresholds (some as much as tenfold to attract only larger and better-structured and capitalised manufacturing investment) to more stringent criteria for total investment or output value per square metre invested.

The trends described above can be seen as the results of a maturing economy, which will bring plenty of new opportunities for foreign investors, bolstering an increased Chinese purchasing power, and a need to become aware of the social responsibilities that must be faced to continue favourable trends. The business climate surveys prepared from time to time by Chambers and other business organisations or the economic reports made by professional experienced business related firms on the ground confirm that the vast majority of foreign investments are profitable in China, including in the south, and should remain so for the coming years as well.

Dezan Shira & Associates is a full-service China business advisory and tax practice, located in nine cities across China.

Seminars on Corporate Income Tax

The long-expected Unified Corporate Income Tax Law for China was passed on March 16th. The Pearl River Delta Office is glad to invite you to the seminar on "Reform of the PRC Corporate Income Tax Law: What impact for foreign invested enterprises from January 1st, 2008?" The international law firm ADAMAS Avocats Associates will inform you about the changes and effects of the reform. The law will be effective on January 1st, 2008.

Seminar dates

May 10th in Guangzhou
May 15th in Shenzhen
May 18th in Dongguan

Annual General Meeting & New DCCC Board
The Danish Chamber of Commerce in China held its Annual General Meeting on March 21st, 2007. A new board has been elected, with the following members:

Tom Behrens-Sorensen, Chairman (Maersk)
Carsten Bleis, Vice-Chairman (China Ease)
Michael Ryde, Treasurer (Lundbeck)
Jens Eskelund, Secretary (Maersk)
Nis-Peter Iwersen, Ordinary Member (Danfoss)
Jens Olsen, Ordinary Member (Volvo)
Humphrey Lau, Ordinary Member (Novozymes)
Jens Purup Krog, Ordinary Member (Access People)
Ulla Payreen Lueders, Ordinary Member (China Access)
Laurids Mikaelsen, Ambassador (Royal Danish Embassy)
Peter Sand, Commercial Counselor (Royal Danish Embassy)

The Secretariat consists of Cathy Duan and Camilla Thoisen.
In connection to the AGM, Danish Chamber has invited Fuli Cao from KPMG and Luka Lu from Capital Associates to deliver a legal and tax update respectively immediately after the National People's Congress.

The Enterprise Income Tax Law, the Property Law and the Labor law are updated. More information is available at DCCC's members-only area: www.dccc.com.cn.

The Nanjing Sourcing Working Group

The nature of the Nanjing market is distinct from that in other cities where the European Chamber is present. The large number of manufacturing companies in the area (80 percent of the Nanjing Office's members companies are involved in manufacturing) and their demand for a platform to share practical experience on the typical challenges of sourcing in China prompted the Chamber to create a Sourcing Working Group in Nanjing.

The main objective of the Sourcing Working Group is to allow Nanjing's members who are involved in manufacturing to systematically exchange ideas and information on the supply of a wide variety of material groups. These material groups range from metal sheets, rods, tubes, to all kinds of plastic parts. From production equipment and tools, testing and work safety equipment to consumable, packing and office materials. The focus is primarily on availability, price and quality of materials, but also on the difficulties that arise when purchasing materials (taking into consideration the issues such as differing material standards and specifications and differing testing norms).

Past topics

One of the hottest topics for the Working Group is availability and quality of moulds and tools in China. In April 2006 expert consultants from Kerkhoff Consulting shared their experience on the subject, presenting the results of their research on "Sourcing of moulds and tools in China".

In June 2006, a Working Group meeting was held on the topic of "Breach of contract by suppliers in China". Mr Anthony Huang, lawyer at Law Mission Shanghai gave a presentation addressing the issues relevant to this problem. At the Sourcing Working Group meeting held in July 2006, the main topic was the legal aspects of sourcing in China, with a special focus on IPR and confidentiality agreements.

The Working Group meeting in September 2006 covered the topic of "Sourcing in China and the Importance of an Effective Quality Assurance". TUV Rheinland Group, China delivered the presentation.

A meeting in December 2006 had the topic "Supplier identification, assessment and selection: best practices and lessons learned from European companies". This session saw a productive exchange of knowledge and experience between many Chinese purchasing managers who have been working for many years as purchasing professionals for European companies.

The topic "Sourcing of machine tools in China or Europe" was discussed at the January 2007 Sourcing Working Group. The objective was to learn from the recent survey conducted by Kerkhoff Consulting, an international sourcing consultancy based in Germany) on the characteristics of the Chinese machine-tool market in comparison with European machine-tool markets.

The most recent meeting, which took place on March 30th of this year, examined the key factors in planning and successfully completing sourcing projects in China. The presentation by Mr Toby Li from Bureau Veritas in Shanghai focused on the characteristics of Chinese suppliers according to his experience, as well as proposed recommendation to overcome challenges of sourcing in China.

New Working Group Chairman

Former Nanjing Sourcing Work Group Chair Mr Ender Erat (Suspa Nanjing Nigh-Tech Machinery & Electronics Ltd.Co.) recently received notice that he will be required to spend more time at his company's Germany headquarters. He recently resigned as working group chair, deciding that he would no longer be able to dedicate the necessary time to fulfil his duties. We would like to thank Mr Erat for his dedicated work and his efforts in establishing and leading the working group over the last 12 months. His professionalism and unwavering commitment have been key factors in the group's success and the Chamber wishes him all the very best in his future career!

The new Chairman, Ms Stella Huang, has been an active member of the working group since its establishment in March 2006. Her professional skills and extensive experience in the area of Sourcing make her an ideal replacement. The Chamber staff in Nanjing look forward to working together with her towards ensuring the continued success of this Working Group. The next Nanjing Sourcing Working Group will take place on 11th May, 2007.

Updates from Tianjin

Tianjin HR Working Group

In March, 2007 the European Chamber Tianjin office organised the fourth Human Resources Working Group meeting. As the "core" of the Chamber, the working group raises hot topics to European companies in China at the high-level conferences for discussion. The topic of this meeting was "Multinationals Developing a Pension Plan Case in China".

The Working Group aims to provide a platform to exchange information among companies and to share their experiences with others who encounter similar issues.

Factory visit

The European Chamber Tianjin Office has already successfully organised six factory visits. There were over 20 visitors to each factory, led by the general manager of different companies. The visit process lasted around two hours, which included a short speech by the European Chamber leaders, company presentation by the management of the company. After the tour, the participants were served with a breakfast and free discussion. The last two factories that we have visited were Clariant Pigments (Tianjin) Ltd on January 12th and Siemens Mechanical Drives Tianjin Co, Ltd on April 11th.

The 14th China Tianjin National Fair & Investment Conference

The European Union Chamber of Commerce in China, Tianjin Office, organised a very successful fair on April 18-22 at the Tianjin International Exhibition Centre. We are pleased to get all support from European companies.

The fair was specially supported by the Ministry of Commerce of China, combining commodities trade and investment recruiting to construct the platform for investment promotion and achieve regional economic cooperation and collaborative development.

Tianjin gets new Party chief

Mr Zhang Gaoli has been appointed secretary of the Tianjin Municipal Committee of the Communist Party of China (CPC), to replace Zhang Lichang, according to a decision by the CPC Central Committee. Mr Zhang was born in November 1946 in Jinjiang, Fujian province. In November 1973 he became a Communist Party Member. He holds a bachelor's degree from Xiamen University, with a major Planning and Economic Statistics.

New Chamber staff

After studying Mandarin and working for a Chinese-Dutch firm in Shanghai for the last two and a half years, Thijs van Munster started as membership manager at the European Chamber in Shanghai in March this year. One of his main reasons for coming to Shanghai was to personally experience the rapid growth of the Chinese economy. What better way to experience this than be active in the European Chamber? With his new position Thijs becomes a crucial cog of the development of the Chamber in Shanghai, making sure that new members are fully integrated into the wide range of activities available.

Organisations in Shanghai with questions concerning the Chamber and/or membership can reach Thijs by email at tmunster@euccc.com.cn, or by phone at (021) 6385 2023 x106.