Exclusive Webinar: H.E. Mr Zhang Ming, Ambassador of the People’s Republic of China to the EU, Head of the Chinese Mission to the EU – 10 December 2020
Dec-15-2020 By : fcccadmin
The EU-China Business Association (EUCBA) and the China Chamber of Commerce to the EU (CCCEU) organized an exclusive webinar with His Excellency Mr Zhang Ming, Ambassador of the People’s Republic of China to the EU and Head of the Chinese Mission to the EU on 10 December 2020.
Ms. Gwenn Sonck, Executive Director of the EU-China Business Association and the Flanders-China Chamber of Commerce welcomed the speakers and the participants to the exclusive year-end dialogue between H.E. Zhang Ming, Ambassador of the People’s Republic of China to the EU, and business leaders. This is the largest webinar of the year with around 350 participants.
Mr. Jochum Haakma, Chairman of the EU-China Business Association, explained that originally an exclusive lunch with Ambassador Zhang and business leaders was planned, but due to Covid-19 this was changed to an online dialogue which brings the opportunity to have a larger audience. It is also the first webinar organized together with the Chinese Chamber of Commerce to the European Union. Covid-19 has changed our world. The speed and efficiency with which China has tackled Covid-19 is really impressive. China has almost no new infections anymore and if there are some infections immediately strict action is taken with quarantine, efficient contact tracing and mass testing. We can learn a lot from this approach in Europe. The EU and China need to work together for example in the development of a vaccine to combat Covid-19. At present, the biggest challenge for companies doing business with China is the fact that they cannot go to China due to the high number of Covid-19 infections in the EU. During these difficult times the EU-China Business Association acts as an important bridge to promote the economic and trade relations between China and the EU. For the full year of 2019, the value of completed European foreign direct investment in China reached USD12 billion, up from USD8 billion in 2018. The top industries were automotive, agriculture, food, consumer products and services. The total 2020 EU FDI in China is projected to reach USD7 billion, which is a decline from 2019 but not far from the yearly average of the last five years of USD8 billion. The completed Chinese FDI in Europe was USD13 billion, down from USD21 billion in 2018. The top industries were consumer products, services and automotive. For 2020 a lower figure is expected due to Covid-19. There is still enormous untapped potential in the Chinese market. More business opportunities will also arise when the EU-China investment agreement will be signed. The EU and China are having the 35th round of negotiations. This offers an opportunity to increase trade and investment. The negotiations are also going online, which is a pity because it was a good experience to come together physically and see each other’s body language that adds to the discussion and the spirit of the negotiations. The agreement will offer new and better market access to investors in Europe and in China. The aim is to sign this agreement in 2020, but time is running out.
The EU-China Business Association is a bilateral Chinese business association in Europe aiming at promoting the economic and trade relations between the EU and China. There are more than 19 member associations representing more than 20,000 Chinese and European companies. In non-Covid times the Association is receiving high-level Chinese delegations often together with the Chinese Mission in Brussels and introduces them to the member companies. The EUCBA is also organizing high-level meetings between European and Chinese authorities. It works closely together with the Chinese Mission. Mr. Haakma thanked Ambassador Zhang for the excellent cooperation and the sharing of information. The EUCBA also works closely with the European institutions including the European Commission.
Mrs. Zhou Lihong, Chairwoman of the Chinese Chamber of Commerce to the EU, said that the year 2020 has been a particular one for everybody. Some may describe this as demanding, bumpy or even disastrous. Others on the contrary may highlight that during the darkest moments we joined forces against a common enemy instead of dividing us. Our struggle pushed us forwards to mutual support and cooperation to find long-lasting solutions. This year we experienced that cooperation is vital to overcome common crises and turn challenges into opportunities. This encouraging attitude reunites us. The Chinese Chamber acts as a bridge builder in the Sino-EU relationship and helps Chinese enterprises in Europe to increase China-EU interaction. We must cherish the momentum and look forward to fruitful deliverables in the coming year.
H.E. Ambassador Zhang Ming gave the keynote speech on China-EU economic and trade relations. This year is a special one for all. The outbreak and global spread of Covid-19 have taken a heavy toll on global industrial and supply chains. The world economy is in the most severe recession since the 1930s. It is a challenge for all to get the economy back on track. On the bright side, China-EU economic and trade relations demonstrate resilience during the crisis. From January to November, bilateral trade approached USD620 billion, up 4.7% year-on-year. China’s exports to the EU and EU exports to China are both on the rise. China is now the EU’s largest trading partner. The EU Chamber of Commerce in China Chairman Joerg Wüttke recently said that, with the resumption of China’s economic activities, many EU companies in China have seen double-digit growth, and with the help of the China market some companies have made profits in the region. The resilience of China-EU economic and trade relations, first and foremost, comes from the win-win nature of China-EU cooperation. This year, the China-Germany EU video summit, the 22nd China-EU Summit, and other high-level events were held. The High-level Dialogue on Environment and Climate Change was launched, as well as the Digital Dialogue. The China-EU Comprehensive Strategic Partnership has gained new political momentum. The Geographical Indications Agreement was formally signed. Xixia mushrooms, Yingde black tea, Bavarian beer, parma ham and other iconic agri-food produce will be better protected and promoted in each other’s market. China-EU trade will be brought to a higher level. The negotiations on the China-EU Investment Agreement, closely watched by many, has made major progress.
The resilience of China-EU economic and trade relations also comes from China’s continued commitment to reform and opening-up. This year, China’s Foreign Investment Law entered into force. The number of items on the FDI negative list has been reduced to 33. China’s doors opened still wider in sectors that interest the EU, such as finance, infrastructure, environmental protection and automobiles. The latest World Bank report elevated China’s global ranking to 31st in ease of doing business and recognized China’s strong commitment and effective delivery of the reform agenda, active participation of the private sector and easy access to digital technologies. The resilience of China-EU economic and trade relations is anchored in China’s commitment to multilateralism and free trade. Last month, RCEP was concluded. The world’s largest FTA is taking shape, covering 30% of the global population and 29% of global GDP. China will also favorably consider joining the CPTPP. A prosperous and open Asia-Pacific will open up new horizons with greater opportunities for China-EU economic and trade cooperation.
China and the EU, having withstood the test of Covid-19, are embracing new opportunities in economic and trade cooperation. The EU has rolled out a historic recovery plan, featuring green and digital transitions at a fast pace. China has made extraordinary efforts to contain the virus and restore the economy. This year, China is expected to achieve positive growth, which will bring hope and driving forces for global recovery. China recently adopted the proposals for the 14th Five Year Plan and the long-range objectives through 2035. China will step up efforts to forge a new development paradigm with the domestic circulation as the mainstay, and the domestic and international circulations reinforcing each other. It must be emphasized that China is promoting dual circulations, not a single domestic circulation, still less a circulation behind closed doors. Despite the drastic changes in the world, China’s fundamental policy of opening up remains unchanged. In the coming decade, China is expected to contribute about 30% of global growth. China’s imports are estimated to top USD22 trillion. By 2035, China is expected to double its per capita income or total GDP. China is not only a world factory, but also the largest market in the world.
Business leaders have a strong business acumen and will find plenty of opportunities in such a huge growing market. To translate opportunities into concrete results, market players need to act pro-actively and creatively. It is up to governments to ensure a fair, just and non-discriminatory market environment. China and the EU are each other’s opportunity and partner. What matters most is for the two sides to deliver on the commitment to mutual benefit, openness, cooperation, multilateralism and free trade, and not to turn business issues into politics. This should be the spirit that guides our frank and fruitful discussions. Ambassador Zhang said that he would be more than happy to listen to the opinions and suggestions, and address the concerns and questions of business leaders. He also hopes that the EU partners could give heed to business voices from both sides.
There is a widely shared concern among Chinese companies operating in the EU that in recent years – especially during the Covid-19 pandemic – the EU business environment has become less friendly, adding uncertainties to their business. They jokingly describe the EU’s anti-trust review, FDI screening and foreign subsidies review as “three huge mountains” weighing heavily on their chests. Some high-tech companies complain that their access is restricted to 5G cooperation projects, as non-technical factors could be arbitrarily used in security assessment, and that their products could be labelled unsafe without any evidence. Such moves are obviously against the principles that the EU has long held, nor do they contribute to the EU’s economic recovery and long-term development. In the first three quarters of this year, Chinese investment to the EU dropped by 26.1% from the previous year, which could not be more telling. Hopefully, our EU partners could take such concerns more seriously.
Next, Ambassador Zhang addressed a few words in Chinese to the Chinese businessmen and women. He continued in English, quoting Chinese President Xi Jinping at the G20 Summit, saying that when Covid-19 is over, our world will rise from the pandemic and emerge even stronger. There is good reason to be optimistic about the prospects of China-EU economic and trade cooperation and making joint efforts to deliver the future we all want. Finally the Ambassador wished the participants a Merry Christmas, and a safe, healthy and happy New Year.
The transcript of the Q&A session will be published in next week’s China Business Weekly.
Webinar: Belgian Customs and their Activities in China – 9 December 2020
By : fcccadmin
The Flanders-China Chamber of Commerce and the Province of East Flanders organized a webinar focused on ‘Belgian Customs and their activities in China’ on 9 December 2020..
Ms. Gwenn Sonck, Executive Director of the Flanders-China Chamber of Commerce, welcomed the participants to the webinar and gave a short introduction on the situation in China and the Chamber. She also thanked the Province of East Flanders for organizing the webinar jointly with the Chamber. The Province of East Flanders has been active on the Chinese market for a long time, together with the Ghent University, which also has a representative in Beijing. The Province of East Flanders and the Province of Hebei are sister provinces since more than 25 years and companies interested to learn more about the opportunities for doing business in Hebei can contact the Province of East Flanders, which has already introduced many companies from East Flanders to Hebei province.
Mrs. Isabelle Bedoyan, Counselor and Customs Attaché at the Embassy of Belgium in China, gave an overview of Belgian Customs’ activities in China in this very special year of 2020. She has been posted in Beijing since 2018, but Belgium has had a Customs Attaché in Beijing since 2008, covering mainland China, Hong Kong and Macao, each having their own customs regulations and administrations. One of the main tasks of the Custom Attaché is to have strong ties with the local customs administrations, permitting the use of this vast network for facilitation and for helping economic operators find their way through the maze of Customs. Belgian Customs has Attaché postings in Brazil, Russia, India, and Indonesia, besides the one in Beijing.
The Customs Attaché has four main tasks:
1. Facilitation of legitimate trade, which includes informing investors which want to develop activities in Belgium and economic operators trading between China and Belgium. The focus is import and export information with and emphasis on prevention and helping understand Customs regulations. The Attaché can also assist with blocked shipments, but the emphasis is on avoiding such a situation. The Attachés can also be an intermediary between Belgian operators and Chinese Customs, offering their network and expertise. But they cannot be a lawyer or a Customs broker and will always operate respecting national laws and local authorities. The emphasis is on prevention and avoiding costs related to delays due to Customs issues.
2. Customs diplomacy, building a professional network. The Attaché’s main contact is China Customs, but also the Anti-Smuggling Bureau. There are regular meetings with international and EU Customs Attachés, and the Attaché also supports the interests of the regions.
3. Fight against fraud. The Attaché keeps an eye on compliance and on illicit trade to make more room for regular trade. Topics include intellectual property rights and endangered species.
4. Economic diplomacy. The Attaché participates in investment roadshows of regional representatives, works together with Chambers of Commerce, and brings Customs expertise to logistics fairs.
Attention points in China are: language and cultural barriers; procedures before and at the border; changing legislation, and the reorganization of Chinese ministries following the National People’s Congress session of March 2018. There are many different scenarios related to companies doing business with China, including export to the Chinese market; production in China; sourcing products from China; and Belgian investments in China and Chinese investments in Belgium. In every scenario there is a Customs aspect.
The reorganization of Ministries in 2018 is still important because some companies still refer to the former names of organizations, which can create confusion. The General Administration of China Customs (GACC) is a full ministerial level organization now integrating the former international responsibilities of the Administration of Quality Supervision, Inspection and Quarantine (AQSIQ). Domestic aspects are now handled by the State Administration of Market Regulation (SAMR). GACC is now also responsible for the registration and supervision of overseas manufacturers of imported food. GACC has now integrated the functions of health quarantine, animal and plant quarantine, import and export of food, and commodity inspection. The reorganization of the ministries created a new organization: the State Administration of Market Regulation (SAMR), which now integrates some responsibilities of the State Administration of Industry and Commerce (SAIC), AQSIQ, the State Food and Drug Administration, and some standardization administrations. The Ministry of Agriculture changed its name to Ministry of Agricultural and Rural Affairs.
Another topic coming up in questions is the Chinese Commodity Code. The International Harmonized System is decided by the World Customs Organization and has six digits. Both Belgium and China are members of this system. The digits that follow are used by countries for different subtitles. Following the reorganization in China, the code now has 13 digits, up from 10. The commodity code is important in communications with service providers and related to procedures needed before imports. If you are uncertain about the commodity code, you can request an import ruling in China or an export ruling with Belgian Customs.
VAT-rates on imported goods decreased over the last years, the minimum rate from 11% to 9%, and the maximum rate from 17% to 13%. There is also a consumption tax similar to what we call excises because it mainly concerns alcohol, tobacco, cosmetics and luxury goods. Finally, there are the Customs duties. If the goods are coming from WTO members, there is the MFN duty rate. Also check the free trade agreements. China has FTAs with 20 countries. Also be aware that duties often change. Some key technical equipment, products and raw materials may be exempt from duty and VAT. There is also a yearly review of tariffs. The China Compulsory Certification (CCC) is the competence of the CNCA and is similar to our CE mark. It covers more than 150 types of products and you need to check which tests are required to obtain the certification.
Because of the Covid-19 pandemic, a lot of new regulations, policies and activities were triggered. Some activities came to a standstill, others accelerated due to the needs of the pandemic, such as imports of masks and test kits. Belgian Customs was also involved in the “Shortage” task force, and giving information on the Chinese export legislation on personal protective and medical equipment and facilitating emergency cargo destined for Belgium. The Attaché had to ask many questions and bridge what was happening in China and Belgium. In the first semester, China had also to deal with import and later export of personal protective equipment (PPE). This exposed the mismatch between the Chinese and EU standards and also the efforts of the Chinese authorities to prevent exports of faulty materials. Some translation was needed not only from Chinese to English, but also what all this really meant on the ground for exporting these goods. It was also a challenge to deal with the high flow at ports and airports. China Customs also had to deal with sick incoming passengers that had to be quarantined. Also in the second quarter, many decisions were implemented by China Customs. Talking about Customs, work is not back to normal, it is rather a new normal. There are still a lot of precautions being taken when organizing trade exhibitions. The fact that you can’t travel is also hindering communication. China has put a new focus on the testing of incoming goods, especially in the cold chain. By November, they had tested 800,000 food packages. The Announcement 103 instituted a circuit breaker system. If a cargo tests positive, there may be a Customs clearance stop of one to three weeks from the related importer. The Chinese authorities also published a guidebook on corona prevention in the cold chain.
The economic support team of Belgium Customs can be contacted at the email da.mf.es@minfin.fed.be and the website is at https://finance.belgium.be/en/customs_excise
Mr. Leslie Lambregts is Director International Affairs at the Belgian Federal Agency for the Safety of the Food Chain (FASFC), the competent authority for animal health, plant health and food safety. It implements the European legislation, including the Official Control Regulation (OCR), the new Animal Health Law (AHL) and Plant Health Law (PHL). Import checks are carried out in designated border control posts (BCPs) and the agency is also delivering export certificates. The main export-related service of the food agency is the international department, responsible for negotiations with countries outside Europe on the conditions to export our products to those countries. Those negotiations to open new markets take a long time – four years or more. First an official request for market access has to be made, then a lengthy questionnaire has to be answered, after which the authorities will evaluate the control system in Belgium. Bilateral protocols and certificates need to be agreed upon. All instructions to export outside Europe are published on the website http://www.favv.be/professionelen/export/ Export inspections are carried out to be included on the closed list of establishments and to deliver certificates for export. FASFC has a close collaboration with the regional authorities, Foreign Affairs, embassies in third countries, the European Commission, and sector federations in Belgium.
Related to China there are 10 ongoing SPS market access files – including animal feed, meat, vegetables and apples. The ASF embargo is still a big issue for the pig sector in Belgium. Since ASF was in Belgium a few years ago, we managed to control the disease and during the last year we did not see any virus circulation anymore. We obtained the pre-status already on a European level, complying with the legislation to be considered as free again, and are now working to regain our free status internationally, hopefully still this year. This will allow us to start the negotiations with China again, but this does not mean that China will allow imports of Belgian pork immediately. It will take quite some time to convince our Chinese counterparts to open the market again. For gelatin, there is no access file ongoing so exports won’t be possible. The raw materials have to be from animals born and raised in Belgium, which is not feasible for Belgian producers. It will be complex to come to an agreement to export gelatin from Belgium to China. FASFC has good contacts with its Chinese counterparts GACC, MARA and SAMR. There is an agreement to post a FASFC Attaché in China and a candidate has finally been found. Annabelle Schreiber will have the title of Belgian Agricultural Attaché for Food Safety and Sanitary and Phytosanitary Related Measures. She will however not be responsible for economic matters related to agriculture as this is not the competence of the Federal Minister of Agriculture, nor of the food agency. She will take care of the market access files and facilitate the negotiations on embargoes on ASF and Asian influenza, which also has an impact on the exports of certain products. She will collaborate will all relevant counterparts in China. Ms. Annabelle Schreiber is expected to leave for China in January 2021.
Q&A: Is Belgium working on an agreement with China for imports of frozen foods? Mr. Lambregts: For frozen foods, in principle you don’t need a phytosanitary certificate, but we need to check what the Chinese requirements are. You can contact your importer, who will probably know the requirements.
Do goods coming from Africa via Belgium to China need to meet EU standards or only when entering Belgium? Mrs. Bedoyan: From a Customs point of view it’s not an import, so the answer is no, unless there is a security aspect. Mr. Lambregts: This is considered to be a transshipment, not destined for the European market, so it doesn’t have to comply with European requirements.
Is there any positive news about the import of food trees? Mrs. Bedoyan: The procedure is quite complicated because the trees need to be planted for a year in a specific area.
Could the Chinese regulations be aligned with the European ones? Bedoyan: The question is who has to be aligned with whom. We think that everybody should align with the EU rules, but the problem is there are national standards which might be different.
Webinar: Car Manufacturing with Chinese Partners: the Corona Challenge 4 December 2020
Dec-08-2020 By : fcccadmin
The Flanders-China Chamber of Commerce, the China Platform of Ghent University, the Province of East Flanders, the City of Ghent, and North Sea Port organized a webinar with Mr. Geert Bruyneel, Head of Global Production Operations at Volvo Cars on the topic Car Manufacturing with Chinese Partners: the Corona Challenge.
Mr. Stefaan Vanhooren, Chairman of the Flanders-China Chamber of Commerce, welcomed the participants to the webinar and introduced the speaker. He also mentioned that the speed and efficiency with which China has tackled Covid-19 is really impressive. Today, the biggest challenge for companies doing business with China is the fact that they cannot go to China as no visas are issued for Belgian travelers because of the high number of Covid-19 infections in Belgium. This is of course temporary. China has almost no infections anymore and if there are, immediately strict actions are being taken with quarantine, efficient contact tracing and mass testing. Meanwhile, China is booming again and life is almost back to normal. The Chinese economy has recovered from its first lockdown and economists now believe that China will be the only country with a positive growth this year. According to the IMF, Chinese growth will be 8.2% in 2021, the highest in 10 years. Foreign investments in China have increased in the first nine months of the year by 5.2% and recorded a significant increase in the service sector by 15% and in the high-tech sector by 25%. This year, e-commerce has become very important, especially in the second, third and fourth-tier cities. China will be one of the main drivers of world growth next year, especially for the G20 emerging countries.
Prof. Luc Taerwe, Director of the China Platform at Ghent University and Chairman of the Association of Engineers, presented the China Platform, one of the five regional platforms at Ghent University and one of the oldest. It was established in 2006, and next year will celebrate its 15th anniversary. Mrs. Inge Mangelschots is full-time coordinator and Mr. Zhang Chi is the representative in Beijing, who is also the representative of the Province of East Flanders. The strategic partners of the China Platform are the Province of East Flanders, North Sea Port, the Flanders-China Chamber of Commerce and the City of Ghent. The China Platform is a center for information and expertise on China and a contact point for students and staff members as well as for external partners. It is organizing visits, seminars and missions, facilitates mobility in education and research, and organizes joint activities with external stakeholders. The Platform also stimulates and facilitates cooperation by identifying strategic partners, encouraging joint PhD’s, establishing links with companies through the triple helix concept and participating in networks and international platforms. The China Platform also does branding and marketing for Ghent University in China and has a WeChat account. There is also a strong involvement of the alumni network with four chapters in Beijing, Shanghai, Chengdu and Guangzhou. It regularly organizes networking events in China and involves the alumni in the recruitment strategy of Ghent University. The Platform has 66 cooperation agreements for students and staff exchanges with China, six agreements for exchange programs, agreements with the TechTransfer Office of Ghent University, and an agreement with the China Scholarship Council (CSC). There are also nine joint labs with Chinese partners. The number of Chinese students and researchers at Ghent University has gradually increased over the last decade to 660 last year. Due to the Covid pandemic, this year there are only 520. This webinar is organized in the framework of the China Lecture Café Series, which was established in 2012 to hold informal lectures during lunch break or in the early afternoon. In the lectures, recent evolutions in China and cooperation activities with China are highlighted. Speakers are from inside and outside the University.
Prof. Taerwe next introduced the speaker. Mr. Geert Bruyneel obtained his Master degree in chemical engineering technology in 1983 in Ghent and started working at the Volvo plant in Ghent in 1988 at the paint lab and later became Director of Engineering and Quality. In 2005, he started working in Gothenburg and in 2010 returned to Volvo Cars Ghent as Vice President and Managing Director. In 2013 he was called back to Gothenburg as President Supply, Quality and Logistics and in 2015 he became Vice President Purchasing, Manufacturing and Logistics for the Asia-Pacific based in Shanghai. Since 2018 he is head of Global Production Operations in Gothenburg.
Mr. Geert Bruyneel presented some practical insights on how the corona crisis was managed at Volvo Cars. China has been the basis for the measures and approach in Europe and the U.S. He first presented Volvo Cars. Volvo has experienced a remarkable growth since it came under Chinese ownership. Despite very different cultures, Volvo achieves to bring out the best of two worlds with respect for each other. Volvo has the freedom to design and develop cars based on its heritage and core values and to become the brand that it wants to be. Volvo Cars is more Swedish than ever before. Besides making Volvo brand cars, the company has 50% ownership of Polestar and 30% of Lynk & Co. Zenuity, now called Zenzia, is a software developer 50% owned by Volvo. The company is active on three continents. In China, Volvo has an engine plant in Zhangjiakou, and car plants in Daqing, Luqiao and Chengdu. The company has about 600 suppliers in China in four clusters: Beijing, Daqing, Chengdu and Shanghai. About 60% of suppliers are in the Shanghai area. About 40% of supplies into the car plants is “just in sequence”. The inbound material supply is organized through three cross docks in Taicang, Changchun and Chongqing, making the connection with the four supply clusters. From a sustainability point of view, Volvo is trying to use returnable packaging. Volvo is producing cars in China with the same quality, standards and processes as in the Gotheborg and Ghent plants. There is horizontal cooperation between the production plants globally to share best practices. To be able to quickly share experiences has also been important in the corona crisis.
The corona crisis has accelerated the change in consumer demand. Consumer behavior is driven by factors like convenient mobility, direct digital relationship with car brands, environmental concerns, and the nature of urban mobility. Volvo’s technology strategy is clear and outspoken: the future is electrified and in 2025 Volvo is expected to sell at least 50% of electrified cars, while by 2030 Volvo Cars might not produce combustion engines anymore. Volvo strongly beliefs in electrification. Investments in electrification, autonomous driving and connectivity continue to represent a large part of the financial efforts to approach the emerging business opportunities in the automotive industry. Mr. Bruyneel said that in his 30-tear career at Volvo he has never seen such fast moving turbulence and dynamics. As to strategic principles, reducing CO2 is the highest priority in the company’s sustainability strategy. By electrifying cars, working with suppliers and addressing global operations, Volvo is targeting carbon neutrality in line with the Paris agreement. The company is focussed on raw materials to make the right choices, for example banning leather.
Confronting the corona crisis in China, there were three periods. At the beginning of the outbreak in January-February, there was a rapid response. After Chinese New Year the company faced the challenge to restart production and in the second quarter was already going to a normalized management. After the outbreak, a very rapid response was needed as it coincided with Chinese New Year when many people were going back to their families. In all sites in China, Volvo launched crisis management teams, with four sub-groups: personal protection equipment supply, human policy, medical technical support, and communication. The first priority was the health and safety of the employees. Employee health information, as well as that of their family members, was collected daily through a WeChat app. This included contractors and suppliers. It allowed Volvo to track the availability of its employees and was crucial in planning production again. Many employees were staying with family, not in their normal place of residence, but the company could follow this up through the app to know who was sick and unavailable to come back to the job. Three things were very important to restart production. First of all was the availability of the employees, because if absenteeism is too high, you cannot restart production. Second was the availability of materials, without which production is impossible. A third element that was assessed daily was sales. Concerning people, one of the key things was communication, giving daily updates and giving people the opportunity to ask questions. The company made special bus arrangements to bring people back to work because many modes of transport were not available. Arriving back at the plant, everybody’s temperature was checked. The production lines and robots were also disinfected.
Most critical at the start-up phase was the supply chain, which was not localized around the plant. Volvo needed to understand the capability and availability of the suppliers. Several hundreds of people have been involved in risk and constraints management. There was also a lack of transportation due to a lack of trucks and drivers, who were also subject to the green code and quarantine measures. The health code made the resumption of work more orderly and scientific. It is based on real-time data and is automatically changed through big data. The QR code was used as an electronic voucher for individuals to get in and out of local areas. Volvo also undertook its social responsibility by for example raising money for medical equipment.
After resuming production, the company entered the phase of normalized management to live and work together as normal as possible. “Normalized” does not mean “back to normal”. There is still daily follow-up with travel and health advice and health measures such as wearing masks are still followed. The good practice of going to plants everywhere for a review can’t be done anymore, so the company switched to a remote simulation of the shop floor experience. This concept of remote performance reviews has been a good experience, so the crisis has given the company also some new opportunities. This successful concept is here to stay, reducing traveling time and expenses, enabling instant best practice sharing on a global level, and improving shared learning with open and transparent cross functional dialogue. Even when the corona crisis is over, Volvo plans to continue the remote performance reviews. Comparing retail deliveries in China in 2019 and 2020, we see a V-shaped recovery and sales were returning very quickly back to normal. Volvo has been selling more cars in China in 2020 compared to 2019. In Europe the drop in sales came later but was also bigger and longer.
Webinar: Financial Incentives for Investing in China – 2 December 2020
By : fcccadmin
The Flanders-China Chamber of Commerce organized a webinar focused on Financial Incentives for Investing in China on 2 December 2020.
Ms. Gwenn Sonck, Executive Director of the Flanders-China Chamber of Commerce and the EU-China Business Association welcomed the participants to the webinar, organized together with the Chamber’s structural partner Flanders Investment & Trade.
Mr. Koen Van Loo, CEO, Federal Investment Corporation (SFPI-FPIM), presented SFPI-FPIM, which was founded in November 2006. It is a common wealth fund with 100% of the shares owned by the Belgian State and also a holding and national investment company. The corporation executes special assignments for the Belgian government, mostly in times of crisis. The focus is on Belgium-related projects, in Belgium, but also abroad if there is a link with Belgium. Focus areas are innovation or the new economy. The company has heavily invested in aeronautics – aviation and airports – which unfortunately has been heavily impacted by the Covid pandemic. The company also has positions in strategic networks. In Belgium there is a new focus on energy transition projects, mobility and social-impact investments. SFPI-FPIM had €2.4 billion of assets at year-end 2019 and €14 billion of assets under management for the Federal State. It has over 120 participations, about one-third of which are indirect investments through funds. Investment criteria include a ticket size for new investments of €5 million or more. There always is an equity part, but the company prefers not to be the lead investor but taking a minority share at the same time as the private investor under the same conditions to avoid state aid issues.
The company is actively looking for collaboration with regional investment companies in Belgium and has excellent relations with PMV, SRIW and Finance Brussels. It is a long-term investor, a so-called “patient capital” group, and also seeks to help Belgian companies grow internationally. It is a lean organization with only 20 staff members and 7 investment managers. Looking at the sectors, the company is active in real estate, finance, aeronautics and health. This year it added impact investing, energy & utilities, and transport & mobility, without abandoning its existing focus areas. The focus areas are built upon enablers, with the emphasis on innovation, even within traditional sectors, and also on sustainability. Current international activities are limited to the BRICS countries, although there has never been a deal with the Russian counterpart. In China, the company is active in two investment funds. The China-Belgium Direct Equity Investment Fund is very successful and is still investing. If there are Belgian or Chinese companies looking for private equity partners, they can contact the Fund. Those looking for venture projects can contact the other fund, Datang Venture Capital Fund. SFPI-FPIM is also active in Brazil and India and will position itself in the future more as a direct investor in the sectors mentioned, always together with a Belgian company. One example is the gas distribution company Fluxis investing in an LNG terminal in a Chinese port. The company has a 60%-plus share in SBI-BMI, which will be presented next and is very complimentary to SFPI-FPIM.
Mr. André Deltenre, CEO, Belgian Corporation for International Investment (SBI-BMI), first presented the mission statement of SBI-BMI: to provide capital and know-how for international investments made by Belgian private sector companies. It is an outbound organization, investing abroad. SBI-BMI will next year be celebrating its 50th anniversary. The company complements FPIM-SFPI’s global mission and focusses on Belgian companies which bring added value to the Belgian economy. It would not support delocalizations but rather support Belgian companies in their international strategy. The fact that SBI-BMI is a government-related institution creates a certain trust for Belgian companies as well as for the country where the investment is realized. The corporation does not bring diplomatic protection to the projects it is investing in, but it is good to know that the Belgian State is behind the investment. The main shareholder is FPIM-SFPI, but there are also private investors in view of the public-private partnership. SBI-BMI’s offer is to come in with two types of activities, first financing and secondly advisory. The company tries to bring in subordinated investment facilities or profit-participating loans, supporting Belgian companies investing abroad. It looks at projects in terms of value-added and generation of revenue to reinforce the own resources of the company. It is a provider of patient capital in projects of five to 10 years. Most of the time the structure and duration of the project is such that it does not have to reimburse its loans immediately.
SBI-BMI is investing between €1 million and €10 million, basically for SMEs, but is now also looking to larger projects. It requests a matching contribution from the Belgian partner to have the same level of commitment. The second service is advisory. The company has almost 50 years of experience in worldwide operations in a wide range of geographies. The investment criteria are that there needs to be a Belgian partner, which has its headquarter and decision-making center in Belgium, but it does not need to have exclusive Belgian capital. The company can do greenfield projects, expansion of existing projects, and acquisition of shares in existing companies abroad. It has done projects in over 60 countries worldwide, which does not mean every country is available to invest in, such as countries under embargo or in conflict situations. Most of the time the company is coming in as a board member or observer in the board to monitor the project jointly with the Belgian company. Projects must adhere to internationally-accepted guidelines about governance, environmental protection and social standards. The company has done 350 projects of which 23% in Eastern Europe and 30% in Africa. It has an investment capacity of €85 million of which €52 million is invested and committed. Over the last decade, the company has financed 10 projects in China, being in the forefront of Belgian investments in China. A challenge has been the appreciation of the currency and salary costs in China, but even in times of Covid, the company concluded a new deal in China in early December.
Mr. Paul Van Eynde, Senior Investment Manager, Capricorn Fusion Fund China, joined Capricorn Partners in October. It has invested €135 million in quest for growth and also through six investment funds. The Capricorn China Fund is the first non-sector-focussed fund. This does not mean a change of strategy, but if you want be a front-runner in tech investment, you need to work with China and its technology, as they are really state-of-the-art. Secondly, China creates a two-way opportunity that Capricorn is trying to exploit. The vocation of Capricorn is to bring European companies to China, which will be the world’s biggest economy in the near future. It also brings Chinese innovation to Belgium and Europe in a tailored way. The investment and the focus on R&D and the belief in innovation are so big in China that we really have to join them in their quest to become the leader. In China there are three times more patents granted on a yearly basis than in the U.S. and even four times more than in the whole of Europe, while 10 years ago there were an equal number of patents in the U.S. as in China. Now China is really leading. The focus today is on the opportunities for European and Belgian companies in China, where the majority of Capricorn’s investments will be. Twenty years from now, China will be the world’s biggest economy at 1.5 times U.S. GDP. The question is: does Capricorn wants to be part of that growth or not? The answer is very clear and Covid has not changed that at all. China just seems to do a better job at recovering from the virus than the rest of the world. China economically is already back at the end of 2019, while the U.S. will need another six months to get to that level and Europe will need a full year, recovering at the end of 2021. These two years of stand-still are a big contrast with China.
Which companies does Capricorn Fusion wants to invest in? Companies that can take advantage of the huge and growing economy and fit well in a number of underlying trends: The Chinese consumer is changing dramatically. There are 800 million people in the working population, double the size of the U.S. and Europe combined, while 180 million people will move up from the low-middle income bracket to the middle-upper income one in the next seven or eight years, which changes consumption patterns and creates opportunities. The sheer numbers are staggering but the population is also greying. By 2027, 22% – or 325 million people – will be over 60, creating opportunities for example in the health care sector. The spoilt generation – born in the 90s and the beginning of this century, which has never seen poverty – is going to become an independent consumer. The Chinese population has gone from starvation to living luxuriously in a couple of decades. One of Mr. Van Eynde’s Chinese business partners said that China has gone from starvation to obesity in one generation. Concerning manufacturing capabilities, China has been the factory of the world in the last decades and will always be an important production force, but it will no longer be in cheap stuff but in production processes where value is added and technology and innovation play an important role. China is also home to the largest on-line community in the world. Urbanization is an important driving force of the Chinese economy. By 2030 three-quarters of the population will live in cities. That creates numerous possibilities such as for Punch Powertrain, which is not an investment made by the Fund, but in which Capricorn played an important role. It has become a blueprint for what Capricorn is looking for in companies. Punch Powertrain is a manufacturer of shiftless gearboxes. A few years ago, management and a number of investors decided to make China an important factor for Powertrain’s growth because of the sheer size of the Chinese market and the changing Chinese consumers. People that started driving a few years ago were first generation drivers, which found it rather convenient not to have to shift gears. By adding China into the mix, Punch Powertrain became immensely successful. A second example is Capricorn’s first investment – Xian Thiebaut. In the 80s Janssen Pharmaceutica saw the gigantic potential of China and its increasing focus on healthcare, and founded Xian Janssen. Tubes Souples was a manufacturer of aluminum packaging material and an important supplier to Janssen Pharmaceutica, which also decided to move to China. Tubes Souples in Belgium does not exist anymore, while Xian Thiebaut is a thriving company valued at €25 million. It is still a big supplier to Johnson & Johnson, but has added a number of companies to the list, including Bayer, Novartis and GlaxoSmithKline. It is a great example of how moving to China can change your destiny.
Q&A: How has the current geo-political tension between Washington and Beijing impacted your investment decisions in China? Mr. Paul Van Eynde: As long as the tensions are between Washington and Beijing, it has not influenced our investment decisions negatively and we do not expect it to be the case in the future. We hope that Europe will remain a force in itself and is becoming even stronger and not choosing sides. What would be the main challenge for foreign companies investing in China? Van Eynde: Being in the right network and making sure that you have the right partner is key. You need time in China and China cannot be a me-too activity of “my neighbor is in China and I have to be there too”. It has to be critical and fundamental for your company. It will require a lot of time and is not something that you take onboard as an extra. Ms. Sonck: Landing at the right location is also important and the Chamber has set up a big network in China also in second- and third-tier cities, such as Qingdao, Weihai, Shenyang, Chongqing and Chengdu, where there are development zones and wherecthe Chamber has built up a network with the foreign investment bureaus. When companies want to invest in China, the Flanders-China Chamber of Commerce can help them to localize and share the experiences from other investors. Mr. Van Loo: If you go to China, always be sure to team up with local investors. China is quite different and you need local input.
Webinar: International Assignments and Changing Working Patterns in the context of the Covid Crisis – 19 November 2020
Nov-24-2020 By : fcccadmin
The Flanders-China Chamber of Commerce and Flanders Investment & Trade organized an information session on November 19 focused on managing international assignments in the context of the Covid crisis and profound changes of the working patterns due to the pandemic.
Ms Gwenn Sonck, Executive Director of the Flanders-China Chamber of Commerce and the EU-China Business Association welcomed the participants to the annual webinar with Deloitte, which is also a Structural Partner of the Chamber. Today, the biggest challenge for companies doing business with China is the fact that they can’t go to China as no visas are issued to Belgian travelers due to the high number of Covid-19 infections in our country. Of course, this is temporary. China has almost no new infections anymore. A few weeks ago there were six asymptomatic infections in Qingdao and immediately strict action was taken, with quarantine, efficient contact tracing and mass testing of nine million people in ten days. The speed and efficiency with which China is tackling Covid-19 is really impressive and innovative. Meanwhile, China is booming again and life is almost back to normal. Economists believe that China will be the only country that will have positive growth this year. According to the IMF, China’s growth will be 8.2% in 2021, which will be the highest in 10 years. Before giving the floor to the speakers, Ms Sonck briefly introduced the FCCC and the EUCBA.
Ms Rimma Abadjan, Assistant Manager, said that the webinar would start with an introduction on the Covid-19 situation on the Belgian and European side, followed by a look at the changing working patterns that Covid-19 has caused. The Covid-crisis was really unprecedented and unexpected and had consequences for the way we deal with migration and global mobility. The very core of all international employment – the movement of people – has been impacted by Covid-19. Governments had to react very quickly to the changes and we have seen abrupt changes at short notice. So there were a lot of challenges that had to be tackled in a quick and not always efficient way. A number of existing programs could not be managed in the same way and companies had to find new ways to deal with reality and to quickly adjust their own policies, which also increased the risks of non-compliance. Business travel was one of the areas that was largely impacted. A number of existing visa programs have been put on hold and Europe is still largely unavailable for business travel. There is a need for flexibility from the companies that translated in a number of new working patterns. Remote work is part of our life now. The impact of Covid goes beyond the immigration aspect.
Ms Abadjan asked participants to answer the following questions: Business have had to adapt internal mobility and immigration policies they use to run their program. Will your new/amended internal business immigration policy continue in a post Covid-19 world? Most companies expect the changes that they have implemented due to the crisis to remain to a certain degree in future due to the changing working patterns and the fact that we discovered that certain things do work despite our skepticism. The second question is: As we continue to navigate through the pandemic, what will be your main challenge in relation to the future of work from an immigration perspective? Most participants answered that managing short term business travel was the most challenging.
Covid-19 had a huge impact on our options of moving. Europe has tried to present a coherent approach at the external borders of the EU based on common criteria. There has been a list of safe countries to allow travel from outside the EU and exemptions to the travel ban for highly skilled workers. The EU has also tried to implement a coherent approach within its internal borders, based on common color codes. There is no reintroduction of border controls as we have seen in the first lockdown in March-April-May. Each member state is still allowed the necessary measures to secure public health within their territories. We have seen quite some variations in terms of quarantine and testing.
Belgium is following the European approach in the management of the external borders. Residents of Australia, Japan, New Zealand, Rwanda, Singapore, Thailand and South Korea can come to Belgium for business travel without testing and quarantine, unless they have symptoms. China is on the list of safe countries as well, but the EU is requiring a reciprocal approach and China has not allowed residents from safe European countries to travel to China. Within the EU, Belgium is allowing all travel but there is a potential quarantine requirement for 10 days, plus 4 days in case of symptoms. To be able to trace contacts, all passengers crossing the border are required to fill out a passenger locator form. In terms of travel there are now more possibilities than in the beginning of the crisis, but they are still limited and subject to certain rules. We have seen no interruption in the processing of work permit applications and there is even a decrease in processing times due to a lower work load. In terms of in-country processes we have seen a move to digitalization and on-line applications. But we have also seen potential delays due to the unavailability of appointments and overload of municipal administrations. In terms of social security, we didn’t see a huge impact because of the authorities’ flexibility towards the rules and the understanding that certain working patterns have changed.
Joke Braam, Senior Manager, mentioned that in June 2018 Deloitte published a study on Intra-Corporate Transfer (ICT) permits and an update of the study will be published soon. The European ICT permit allows foreign companies to employ their non-EU employees in different EU member states. In these uncertain times, it is very difficult for companies to navigate through the complex immigration rules and the ICT permit will allow some further flexibility for working across borders in the EU. In 2014 the European Council adopted the proposal of the Intra-Corporate Transfer Directive on the conditions of entry and residence of third-country nationals in the framework of intra-corporate transfers. The 25 participating member states had two years time – till November 2016 – to implement the directive in their national legislation. The UK, Ireland and Denmark opted out of this directive. All 25 countries have meanwhile included the directive into their legislation. In Belgium it will enter into force in January 2021. ICTs can be non-EU nationals assigned from an entity of a multinational company outside the EU to another entity within the same group within the EU. It covers executives, specialists and trainees. For example it would cover a Chinese manager working with Deloitte in China who would be assigned to Deloitte in Belgium. The main benefit of this directive would be for international companies to allow for intra-corporate transferees to be able to enter, stay and work also in other EU member states without the need to apply for additional work authorization in that country. This is allowed for a period of up to 90 days. Belgium has not introduced a quota on the number of ICTs that can be assigned. There are certain conditions that need to be fulfilled to be eligible for this service. In Belgium they differ according to the region where the employee will be working. A minimum wage requirement must be respected, the employee must hold a bachelor degree, and most countries have applied a certain level of seniority. In the Flanders and Walloon regions, prior employment of at least three months within the same group is required before you can apply for an ICT permit, while in the Brussels region the transferee needs six months of seniority. The ICT permit can be issued for a maximum validity of one year for trainees and three years for executives and specialists. The ICT period can be renewed but there is a cooling off period of three months, when the transferee is required to be outside EU member states.
What are the advantages of the ICT permit? It is a single permit for work and residence. It increases the mobility of staff of global companies across the EU. It offers the possibility of short term mobility of up to 90 days without the need to apply for another local permit. The ICT short-term mobility is more flexible than the current Schengen rule, which is limited to 90 days in any 180-day period in all EU member states, while for the ICT it is per member state. The ICT permit also offers some advantages to partners and spouses in view of access to the labor market. The ICT permit has also some disadvantages. The disadvantage in Belgium is that today it will not yet be issued. After the validity period, the permit is not immediately renewable, meaning that the employee will have to leave the territory of the member states for three months. In order to be eligible for an ICT permit, the employee will need an employment contract with the home country, so it is not applicable to local hires. The ICT permit entails only temporary migration, as the transferee will not build up any rights for permanent residence in the host member state. Transferees also should be employed within the same group for at least three months prior to their transfer.
Some other things need to be taken into account when deciding to use or not to use an ICT permit. For example, a Chinese employee assigned to Belgium may also work in other EU member states which may result in a “simultaneous employment” situation under EU socials security rules, entailing that local social security contributions become due. From a labor law point of view there is the risk of forbidden chain-secondment and forbidden “putting at disposal” of employees and the need for vigilance to comply with local labor law. Compliance is also required with the European Posted Workers Enforcement Directive (PWED). Last but not least, corporate tax rules may entail creation of taxable “permanent establishment” due to the presence in a third country. One should not be blinded by the advantages of the ICT permit but be advised on all aspects, such as social security, labor law and taxation. Deloitte has all the expertise to guide your company to the right set-up.
Dieter Kuipers, Senior Manager, explained that we are all facing remote work on a daily basis. The way in which we work has been evolving over many years. Over the past 20 to 30 years, long- and short-term assignments have evolved and been replaced by other types of mobility. Remote work is not originating from Covid, but has accelerated. We all have been working partly from home during lockdown periods. Technology supports individuals to work from home, virtual teams became a reality and businesses were able to continue working during the pandemic. Over 75% of the individuals who have been working from home due to the pandemic also want to continue to work remotely in the future. Around 47% of employees indicated that their employer provided the equipment needed to work from home. But there were also some challenges as 27% of workers felt isolated while working during the pandemic. From the employers’ point of view, 38% have increased remote work opportunities and 41% of workers are predicted to work remotely at least some of the time post-pandemic. We are at an important moment in time to think about this because, due to the lockdown, traditional working patterns changed overnight. Now that a vaccine is coming we are looking at how to go forward and how to embed working from home in the organization. How does working from home look like? The domestic remote worker is an existing employee wishing to work from another part of the same country. The number of international remote workers is also increasing. Those are individuals who have their family in one country and moved to another country and now want to work more from the country where their family is located. Also, new hires may want to work from another country. Being able to work remotely provides opportunities. The work force will become more diverse. As location becomes less relevant, companies can focus on hiring the right skillset, not a person in the right location. Physical presence is becoming less of a key component for remote work.
Steven Trippaers, Manager, talked about the challenges of remote work. From a tax point of view, many aspects are to be taken into account. From a corporate tax point of view, there is the risk of establishing permanent establishment from an employee working remotely. There are also the issues of transfer pricing, indirect tax and withholding tax exposure, and where intellectual property is located and employees creating this IP. There are also compliance issues regarding the employment and immigration laws, and filing of annual individual income tax returns. Remote work is a cross-functional effort, requiring attention from a lot of different functions to successfully enable remote work. It will be crucial to work out a long-term approach to remote working to ensure its success. It is important to embrace the change and fit it into your business strategy.
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