The China-Israel Innovation Hub (Shanghai) was launched in Shanghai’s Putuo district. It is a major step in Shanghai’s implementation of a national strategy to promote Chinese and Israeli scientific and technological innovation. Twenty companies or institutions, 10 of them from Israel, will be based at the China-Israel Innovation Hub on the former site of the Shanghai Hero Pen Factory, now renamed Hero World. Leading Israeli incubators, such as Ehealth and Trendlines, which focus on medical and agri-food tech, will operate at the hub in Taopu Smart City, serving Israeli high-tech and startup firms. Both incubators, among the 19 registered with the Israeli Innovation Authority, were attracted to the hub by the large market and strong production ability of China, said Qiang Hao, Deputy General Manager with the Shanghai Taopu Smart City Development Construction Co. China’s Vice President Wang Qishan signed the China-Israel Innovation Cooperation Action Plan (2018-2021) during a visit to Israel in October last year.

Putuo aims to develop the innovation hub into a demonstration zone on the protection of intellectual property rights (IPRs) in Shanghai and China.The district also established an investment foundation totaling CNY150 million to assist startup firms get off the ground within the hub. Eighteen preferential policies in nine categories will soon be released to further benefit the companies. The companies and institutions that move into the hub before the end of 2019 can enjoy reductions on lease and tax, as well as subsidies for office decoration, while foreign professionals can claim housing subsidies and awards. The innovation hub aims to attract 60 high-tech companies from across the world within three years.

The hub is within Taopu Smart City, a former industrial park being developed into a high-end business district. The hub is expected to make Putuo’s Taopu area rival the Zhangjiang Technology City in the Pudong New Area as a key center for the development of Shanghai as a technology and innovation center. The first phase of the hub’s development has been completed on the former site of Shanghai’s Hero pen factory, which dates back to the 1930s. It offers 1,500 square meters of exhibition space and a service center, and another 1,500 square meters of support facilities and 4,500 square meters of office space.

The second phase will be expanded to the Top Plaza by 2021. It will feature about 50,000 square meters of offices and over 10,000 sq m of apartments. The East China Normal University and the Chinese Academy of Sciences (CAS) will cooperate with the Weizmann research center, the University of Haifa and the Hebrew University of Jerusalem on talent training, joint laboratories and industry research institutes. The innovation hub in Shanghai has launched an overseas office in Tel Aviv, later to be followed by offices in Haifa and Beersheba, the Shanghai Daily reports.

European Union in China Chamber of Commerce President Joerg Wuttke

Higher investments in China will help European companies to offset tariff impacts arising from trade tensions and evade downside risks from global economic headwinds, Joerg Wuttke, President of the European Union Chamber of Commerce in China, told China Daily in an exclusive interview. European businesses continued to be bullish on prospects in China and 22% of the respondents in a recent survey remained confident on sustained profitability, he said. As the Chinese market continues to open up, European companies will be more than keen to pursue growth opportunities, especially in areas where they have the same opportunities as their Chinese counterparts, even though some sectors are still being restricted, said Wuttke.

“There will be many opportunities in China’s future development for the European companies that are already here and we see a generally open market in which they can operate.” To strengthen the resilience of the Chinese economy, Wuttke emphasized the necessity for the private sector to develop faster and have a larger market share in some areas that are now dominated by state-owned enterprises (SOEs). He stated that European companies are ready to deepen their presence in China, if they get a more level playing field and equal treatment. The China-U.S. trade tensions have posed several challenges to the global economy, and so also to European companies in China, with many seeing supply chains disrupted and others being forced to raise the prices of goods sold both in China and the United States.

Some member companies of the European Union Chamber of Commerce have managed to mitigate effects by adapting strategies and supply chains, or by leveraging either their own global operations or highly diverse supply chains across other markets to shift production, Wuttke said. While some European companies have shifted investments out of the U.S. or China, several have begun the process of changing suppliers. “Interestingly, some of our member companies have mentioned that they were considering increasing their investment into China, essentially adopting the strategy of further onshoring to avoid tariffs altogether,” he said. Wuttke added that the recent revisions to China’s negative lists for foreign investment are an additional step in the country’s ongoing opening up process.

In the Chamber’s Business Confidence Survey 2019, 26% of respondents said they felt more welcome than when they first entered the Chinese market, up 4 percentage points on a yearly basis. The companies said the most significant reason for their optimism was greater market access. During the first five months of this year, investment from the European Union in China increased by 29.5% from a year earlier, the China Daily reports.

The Netflix documentary “American Factory” tells the story of American workers on a production line owned by China’s Fuyao Glass in Dayton, Ohio. It vividly portrays the experiences and culture clash of American workers and Chinese management. It not only shows U.S. viewers how work in a Chinese-owned factory in the U.S. unfolds, but has also stirred up discussion in China.

The film, backed by Barack and Michelle Obama’s new production company Higher Ground, documents how Chinese auto-glass company Fuyao built a factory near Dayton, Ohio, where thousands of workers were laid off when General Motors closed its plant in the rust belt a decade ago. Fuyao brought not only new jobs to Ohio, but also high expectations and a harsh management style, customary in factories across China. It most notably spent more than USD1 million to put down a unionizing campaign. Although Netflix is not available in mainland China, pirated and Chinese-subtitled copies of the film have been circulated online, and it has been widely discussed on social media. On popular social network WeChat, a post offering a summary of the documentary along with discussion of whether Fuyao could be considered representative of a Chinese-run factory has been viewed more than 100,000 times.

Fuyao’s investment in Ohio was welcomed at first, but the cultural gap soon emerged. The American workers complained about long hours and insufficient safety measures. The Chinese management staff on the production lines were unhappy about the pace of the American workers and the quality of the products they were making. Fuyao’s billionaire Chairman, Cao Dewang – nicknamed “the king of glass” in China – visited the factory, replacing the top American Manager with a Chinese who had years of experience in the U.S. Some viewers expressed their fascination with the sharp contrast between Fuyao’s factories in America and China.

The Ohio employees worked eight hours a day, five days a week. Some made enough to rent their own apartments. They complained about the low wages and safety hazards despite the difficulty of finding other factory jobs. In the southeastern Chinese city of Fuqing in Fujian province, where Fuyao Glass was founded, however, migrant workers lived in dormitories, worked 12-hour shifts and went home once or twice a year. They chanted slogans every morning pledging to work hard. They picked up shattered glass with minimal protection. The contrast has led to a wave of reflections on the life of blue-collar workers in China as well as a heated debate over whether the country’s economic success has justified their ordeal or not.
Some regard the film as a poignant criticism of China’s labor abuse, which includes harsh working conditions, a workplace culture that encourages self-sacrifice, and state crackdowns on independent unions. But others said the film demonstrated the superiority of China’s culture and political system – without the harsh factory work, the country would not have achieved rapid development as a whole. They also defended entrepreneurs like Cao for creating jobs and lifting people out of poverty. Directors Steven Bognar and Julia Reichert said they wanted to spark a conversation about how the working class, both in China and America, were being affected by the forces of globalization and automation, the South China Morning Post reports.

China will remove all access restrictions on foreign investment in areas outside the negative list by the end of this year, as part of the country’s overall effort to further open up the economy and pursue high-quality development, Meng Wei, Spokeswoman for the National Development and Reform Commission (NDRC) said. The revised negative list on market access of foreign investment and the catalog of encouraged foreign investment industries is to be released by the end of the month. “Our negative lists will only be shortened further,” Meng added. “By the end of this year, China will lift all barriers to foreign investment not included on the negative list, and China will encourage more foreign investment in more fields, especially for the central and western regions.” A negative list indicates areas where investment is prohibited, while all other areas are presumed to be open.

Li Gang, Director of the Academic Committee at the Chinese Academy of International Trade and Economic Cooperation, said that “in the era of economic globalization, shutting our door to the outside world would not help China. We need to foster a better business environment and widen market access to attract more foreign investment, which will help fuel innovation, and improve industrial upgrading and high-quality economic development in China.”

China’s foreign direct investment (FDI) grew 6.8% year-on-year to CNY369.06 billion in the first five months of this year, according to the Ministry of Commerce (MOFCOM). Manufacturing FDI in China reached CNY112.89 billion, up by 12.4% year-on-year. According to the World Investment Report 2019 published by the United Nations Conference on Trade and Development (UNCTAD), China was ranked as the world’s second-largest FDI recipient after the United States, accounting for more than 10% of total global FDI. China ranked 46th out of 190 economies in the World Bank’s newly released ease of doing business rankings for 2018, compared with 78th place in 2017, the China Daily reports. There will be one list for pilot free trade zones and one for the rest of the country.

Three-quarters of U.S. companies operating in China said the escalating trade war between Washington and Beijing was hurting their business, according to a new survey by the American Chamber of Commerce in China. More than half of respondents said that higher tariffs imposed by both countries were cutting into demand for their products and 42% said they were experiencing higher manufacturing costs. Of those surveyed, 38% said they were seeing higher sales prices for their products. “The negative impact of tariffs is clear and hurting the competitiveness of American companies in China,” AmCham China and AmCham Shanghai said in a joint statement. The survey interviewed 239 member companies between May 16 and 20, with nearly 62% of the respondents coming from manufacturing-related industries.

China and the U.S. appeared close to reaching a trade agreement as recently as late April, but the Trump administration abruptly reversed course earlier this month and increased tariffs from 10% to 25% on thousands of Chinese goods. As tariffs have increased, a third of companies said they were delaying or cancelling investment decisions, according to AmCham. Of those surveyed, 35% said they were adopting an “in China, for China” strategy, localizing manufacturing and sourcing for the Chinese market, rather than exports. “Such a strategy constitutes a rational choice for many companies to insulate themselves from the effects of tariffs while maintaining their ability to pursue domestic market opportunities,” the Chambers said.

More than half of respondents said they had not experienced an increase in retaliatory measures other than tariffs by the Chinese government, but one in five said they had experienced increased inspections and slower customs clearance of their products. The tariffs have not been encouraging companies to move jobs back to the U.S., according to AmCham. Of the surveyed companies, 41% said they were considering relocating or had relocated manufacturing facilities outside China, but only 6% were considering moving back to the U.S. Southeast Asia was the top destination, followed by Mexico, the South China Morning Post reports.