Opportunities to do business

in China Scottish Business Trade Mission Beijing 8 – 10 September 2013 Shanghai 10 – 12 September 2013 Shenzhen 12 – 13 September 2013

Our programme includes networking receptions, market briefing seminars, and one-to-one meetings.

Key sectors: • Creative Industries and ICT • Energy • Financial and Professional Services • Food and drink • Life Sciences • Textiles

China Market Background China is THE great economic success story of the past 30 years. Since the “reform and opening-up” policy was introduced in 1978, China has changed beyond recognition. A Soviet-styled planned economy has transformed into a vibrant market-oriented economy and 400 million people have been lifted out of poverty. Almost the same size as Europe, with twice the population, China is a varied region made up of over 30 different provinces and municipalities. China’s economy grew 7.8% in 2012, the best performance of all major economies.

companies, content and technology licensing, and partnerships with local production companies in broadcasting and production areas.

Well known for its manufacturing capability, China is the largest global producer of toys, textiles, washing machines, cameras and computers (among hundreds of other products). It is also the world’s largest consumer of iron, steel, coal and cement, and China’s hunger for raw materials continues. Over a million enterprises have flourished, and nearly 40 Chinese companies have entered the global Fortune 500 list.

Scottish companies already active in China include: Wolfson Microelectronics and Logitech.

With rapid and continuous industrialisation and urbanisation, a vast and fast growing consumer market has emerged. Bicycles and Mao suits have been substituted by 13 million cars (now the largest car market in the world), international labels and luxury goods. China is also the world’s largest ICT market, with over 600 million mobile users and more than 400 million internet users. Private consumerism continues to develop with greater sophistication. While the rise of China is easy to acknowledge, businesses constantly need to catch up with the speed and depth of change and development in China’s large and complex market space. Whether selling, trading, investing or franchising, China offers opportunities in abundance to UK companies, large or small. Creative Industries and ICT Creative industry in China includes entertainment, animation and digital games, TV, production and distribution, publishing, cultural exhibition, internet media, industrial design and architecture. So far, there are over 50,000 cultural and creative enterprises, of which 8,000 have a sales turnover of +5 million RMB per annum. Development of China’s cultural and creative industry calls for further cooperation with overseas companies that have strong expertise in this area, and Scottish companies certainly have a lot to offer. The gaming industry in China is huge, with estimated sales revenue expected to reach 135.22 billion RMB by 2017. There are also significant opportunities for urban planning and architecture design

By the end of 2012, there were 1.4 billion users of telephone in China, which was made up of 280 million fixed phone users and 1.12 billion mobile phone users. 246 million users were connected to a 3G network. Mobile phone service covers 83% of China’s population. China has more than 513 million Internet users.

Energy According to the International Energy Agency (IEA), China is the world's 2nd largest oil consumer after USA and the largest global energy consumer. China remains the world's largest top coal producer and consumer and accounted for about half of the global coal consumption, an important factor in world energy-related CO2 emissions. China’s current energy mix is approximately: Coal – 70%; O&G – 23%; hydropower – 6%; nuclear – 1%; and other renewables – 0.3% China is actively exploring for new discoveries domestically onshore and offshore, with CNOOC proactively expanding further offshore, e.g. South China Sea a main focus in coming years. The Chinese Government’s top priority is to improve energy efficiency, secure energy supply, and speed up non fossil energy inc. hydro, nuclear, wind, PV/solar, and biomass. China houses large, though not particularly strong, manufacturers of renewable energy equipment such as wind turbines and solar PV. China also lacks core technologies, which have to be imported, offshore wind energy in particular is a new market for China and requires new technologies for this sector. Scottish companies already active in China include: Aggreko, Clyde Blowers, Sgurr Energy, Weir Group and Wood Group. Financial and Professional Services The financial services sector is an ever growing, if strictly regulated, sector in China. It comprises of banking, fund management, PE/VC, legal, accounting, insurance and ETQ (Education, Training & Qualifications). China is the

China Market Background biggest foreign reserve country in the world, at about US$3.3 trillion in Dec 2012. Banking, fund management, PE/VC, insurance, pensions, securities, consultancy, training, education and legal and professional services are all fields offering potential for UK firms- with a number already doing successful business in the sector. The internationalisation of China’s Capital Markets means further opportunities open to UK companies, both inside and outside China.

Life Sciences Currently, 16 cities are conducting national level pilot public hospital reform projects. Government investment promises huge potential for the medical device market. It is predicted that 20% of the total RMB850 billion (about £85 billion) will be invested on medical device purchasing.

Scottish companies already active in China include: Aberdeen Asset Management, Standard Life (Heng an Standard Life Insurance), Standard Life Investments and RBS.

The biopharmaceutical industry in China has experienced impressive growth in recent years. Driven top down by state prioritization as a key high growth sector, it has benefited from a significant amount of government investment and policy support. Investment to date has resulted in a major network of showcase science parks; top universities; Clinical Research Organisations (CROs) partnering with multinationals; and the best of its manufacturing facilities operating to international standards. The biopharmaceutical market is expected to maintain double digit growth of approximately 20-25% and to be worth over US$35 billion by 2015.

Food and Drink

Textiles

China’s food and drink industry is among the country’s fastest-growing sectors, with output rising by more than 20% annually. Food safety issues just won’t go away – health and hygiene scares continue to be a major concern in China’s food industry. This has further opened up the market for food importers and has had a positive effect on sales of processed foods, where hygiene and food origin concerns are offset by the higher selling prices.

Luxury consumption in china is increasing fast (2nd largest market in the world). A recent report shows that the overseas consumption by Chinese on luxury goods during the Spring Festival in 2013 reached US$8.5billion, with a growth rate of 18% comparing to 2012.

There are a broad range of opportunities for professional services firms in China. Key areas of interest include: Accountancy, Corporate Finance, Legal Services and Intellectual Property.

With high rates of GDP growth in China, rising income levels, urbanisation and new middle class bring imported products even more opportunities. Industrial experts predict that the next 10 years will be the “Golden Ten Years” for the high speed development of China’s imported food. By 2018, China will become the largest country for imported food in the world. The Chinese spirits market is expected to reach a value of US$11.3 billion by 2013. Currently, the Chinese market for whisky is worth GBP 80m a year and this number will grow by 100 percent in the next four to five years. Scottish companies already active in China include: Erdington Group and William Grant & Sons.

China is also a large market for technical textiles, this is due to China being a manufacturing cluster for fast trains and domestic airplanes. An example of a Scottish company with a presence in China is Kinloch Anderson.

Outline Programme (Please note, the programme is still subject to change) Sunday 8th Shenzhen Delegates arrive into Shenzhen, via HK or Guangzhou 1900 Welcome dinner with Consul General and local business contacts and stakeholders Monday 9th Shenzhen Breakfast briefing from SDI/UKTI and industry – orientation and doing business AM Time for individual company business meetings Lunch Own arrangements PM Time for individual company business meetings Networking buffet dinner with Shenzhen industry contacts Tuesday 10th Beijing AM Early morning travel to Beijing Noon Lunch with legal sector guest speaker Q&A – ‘Intellectual Property Protection’ PM Time for individual company meetings Eve Business Networking Reception (including food and drink promotion) up to 300 people Wednesday 11th Beijing AM Time for individual company meetings PM Time for individual company meetings Eve Flight to Shanghai Thursday 12th Shanghai AM Time for individual company meetings Noon Lunch and speaker and one to one clinics with GlobalScots and Scottish firms in Shanghai PM Time for individual company meetings Eve Business Networking Reception (including food and drink promotion) up to 300 people Friday 13th Shanghai AM Time for individual company meetings PM Time for individual company meetings 5pm Washup and debrief Eve Depart China for Scotland

*All group activity is provided as part of the SDI mission; however one-to-one meetings would need to be arranged separately. These meetings and visits can be arranged independently yourself, or you can speak to your trade advisor about how SDI/UKTI can assist you with this. If you do not have a trade advisor then a SDI representative will be in touch to discuss the trade mission in more detail.

Associated costs and financial support There is no charge to participate in this trade mission and the activities as planned in the mission programme. You will be responsible for covering the costs of your travel, accommodation and subsistence. You may be eligible for MVS funding to assist with these costs. The level of assistance available is a total of £750 per company. By submitting your application form you will automatically be applying for MVS funding and you confirm that you have read andunderstood the information below regarding MVS eligibility criteria. If you do not wish to be considered for MVS funding please let us know upon submission of your application. MVS Grants: Businesses meeting the eligibility criteria will be able to receive up to 6 MVS grants but may not visit one market more than twice. This is a lifetime limit. Only one representative per eligible business may receive an MVS grant on a particular business trip although others are welcome to participate if funded by their business. Please note that grants are payable to the company, and not the representative. Double Funding: Companies who are receiving a travel grant from any other UK Government or national or local government source or from European sources of funding in respect of a market visit may not claim an additional financial package.

State Aid: These grants are classed as de minimis State Aid by the Commission of the European Communities and all applicants for grant must ensure that they do not exceed the limit of €200,000 over any rolling three year period (for fisheries sector the maximum level is €30,000). What to do now? If you would like more information about the trade mission, or to discuss any aspect of this in more detail please contact Paul Clark (details below). Along with this document you will have been sent an application form. If you don’t have an application form please contact Paul Clark who can provide you with one. To apply for a place on this trade mission please complete and return the application form to Paul Clark. The final deadline for applications is Monday 8th July 2013 and early registration by Friday 1st July is recommended in order for us to provide you with the most tailored service possible. Places on this trade mission are limited and all applications will be assessed and a decision on your attendance will be confirmed as soon as possible after application. Recommended hotel accommodation, flights from Beijing to Shanghai, and Shanghai to Shenzen, and detailed mission programme details will be discussed once you have been approved to attend the trade mission. For all enquiries relating to this trade mission please contact: Paul Clark on 0191 4266333 or email [email protected]