Initiative Fribourg - Zhejiang

Direction de l’économie et de l’emploi DEE
Volkswirtschaftsdirektion VWD
Initiative
Fribourg
Zhejiang
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Une opportunité
pour les entrepreneurs
fribourgeois
Séance d’information, Fribourg, le 21 janvier 2016 - CCIF
Contenu
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Initiative Fribourg - Zhejiang: l'agenda
1. 
Introduction
M. le Conseiller d'Etat Beat Volanthen
DEE, Canton de Fribourg
2. 
Le Marché chinois
M. Nicolas Musy, Managing Director, Swiss
Center Shanghai
3. 
L'initiative Fribourg-Zhejiang
MM. Jean-Luc Mossier et Joël Savary
Promotion économique, Canton de Fribourg
4. 
Questions / réponses
5. 
Apéritif et networking
Initiative Fribourg-Zhejiang 2016
2 2. Introduction
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Un dragon dans le moteur
>  Baisse de 250 à 80 millions des
Chinois vivant dans l’extrême
pauvreté entre 1978 et 2015
>  596 milliardaires en 2015 (572 aux
Etats-Unis)
>  27’000 milliards $ de PIB prévu en
2019 (22’000 pour les USA)
>  Triplement de la classe moyenne
d’ici à 2022
>  46 des 200 villes les plus importantes
en PIB seront chinoises en 2025
>  En 2025, le PIB de la ville de Tianjin
= Suède
Initiative Fribourg-Zhejiang 2016
3 2. Introduction
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Fribourg - Zhejiang:
10 ans de relations
Initiative Fribourg-Zhejiang 2016
4 2. Introduction
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Fribourg - Zhejiang: 10 ans de relations
>  2006: signature mémorandum de
coopération
>  2009: signature Accord de partenariat et
Protocole d'application
>  2010: délégation Zhejiang à Energissima
>  2011: FR hôte d'honneur foire Ningbo
>  2012-2014: échange collaborateurs /
stagiaires entre Canton et Province (1
in / 2 out)
>  Mai 2013: signature MOU
>  2006-2015: visites réciproques de
diverses délégations
Initiative Fribourg-Zhejiang 2016
5 2. Introduction
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Une opportunité à saisir !
>  Faire profiter les
entrepreneurs fribourgeois de
nos contacts au Zhejiang
>  Donner une impulsion pour
faciliter l'accès au marché
chinois
>  Un soutien à la diversification
pour les industries
exportatrices
Initiative Fribourg-Zhejiang 2016
6 3. Le marché Chinois
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M. Nicolas Musy, Managing Director, SCS
Initiative Fribourg-Zhejiang 2016
7 Le Marché Chinois?
Où va-t-il …
– le point de vue business
Fribourg Zhejiang Forum
21 Janvier 2016
One of the Authors
§ 
Nicolas Musy, Physics Engineer,
Swiss Institute of Technology Lausanne (EPFL), Alumni Award 2004.
EPFL China Coordinator since 2006.
§ 
Business in China since 1986, living in China since 1988.
§ 
Established first Swiss industrial SME in China (Nove Marzo, knitwear
for export, 1993). Founder of www.LXPrecision.com (first foreign hiprecision turned part company in China).
§ 
Swiss Center Shanghai Founder & Managing Director, 8 years VP
SwissCham China.
§ 
Founding Partner of China Integrated Supported about 300 SMEs’
China projects in the past 15 years.
Where is China Heading?
§ 
The Economy from a Business Point of View:
§ 
China’s is not slowing down for foreign businesses
§ 
SMEs are doing well
§ 
One of the best global opportunity for businesses
§ 
Reforms 2.0
§ 
Competitiveness: Beyond Labor Costs
§ 
Technology to Play a Central Role
§ 
A New Opportunity: Cross Border e-Commerce Accelerating sales …
Source: Swiss China Survey 2014 … and profits even more !
Source: Swiss China Survey 2014 Consistently high priority for investments
Source: Swiss China Survey 2014 Source: Swiss China Survey 2014 China’s Absolute GDP Growth is Up!
“How confident are you that your operations in China will be successful …”
Swiss Companies Source: Swiss China Survey 2014 One of the Best Global Business Opportunity One of the Best Global Business Opportunity => Reforms 2.0
Reforms 2.0: reversing the state system
§  Growth for prosperity of the Chinese people is a condition for stability
(21st century version of “Mandate from Heaven“)
§  Government investment has maintained growth since 2008
§  State banks receive citizens’ savings at fixed rates
§  Banks provide loans to SOE and to local governments
§  But government debt is increasing too fast
§  13% in 6 months, reaching 56% of GDP in 2013
§  To maintain growth without growing government debt …
§  For efficiency, deregulate the economy but regulate the government!
§  Encourage private investments & consumption (=> increased consumer goods imports)
§  Develop technology to increase :
§  productivity (of production and economy in general), robotics
§  added value of products – Eg. Xiaomi
§  New products and companies “mass entrepreneurship” +44% company registrations
Growth of Government Debt & Credit
A Quadruple Challenge !
§  Construction has created a huge
inventory => negative growth!
§  Working population is peaking =>
no growth from more workers
§  Rising wages for consumption =>
margins go down and efficiency
must increase
§  Changing a system for 1.4 Bio
people
Reforms 2.0 in 3 Steps
1. 
Eradicate Government Corruption
–  Recover popular support ("abt 90%" approval rate of Xi Jinping)
–  Bring administration in line => ensure implementation of new policies
–  Get rid of internal opposition
2.
Establish « Rule by Law »
–  Ensure stable clean government
–  Establish a level playing field for businesses
–  Motivate entrepreneurs
3.
Grow the Economy Sustainably
–  Financial system reform (rational allocation of capital)
–  “Mass Entrepreneurship”: Indigenous technology development
–  Promotion of domestic consumption (increase of minimum wages, medical &
social insurance net)
–  Ensure restoration of the environment (clean- & green-tech investments)
While the first set of reforms focused on bringing in foreign capital & exporting,
this one focuses on boosting domestic firms & consumption
Competitiveness: Beyond Labor Costs
Productivity balance labor cost increases
§  Salary increases
–  6% in Shanghai
–  Close to 10% overall
–  Min wages +12-13%
§  But Producer Price Index
–  +15% since 1996
–  -1.4% in 2013,
-3.3% in Dec 2014
§  Smart Machines are
coming
–  Textiles back to USA despite
1 to 6 salary difference
–  Automation is a must in
China
Productivity Gain is now the Daily Bread
- the end of easy money …
§  Unit costs (of labor, rent, …) are increasing for industrial and
service companies (service more than industrial)
§  Prices are stable (services) or decreasing (industrial)
§  To maintain margin, there is only efficiency:
–  Develop Lean Management
–  Automate
–  Reduce waste
§  … and go up the value chain:
–  Increase quality level
–  Produce more difficult, knowledge intensive, sophisticated products &
services
•  But it sounds familiar: we know how to do that very well … !
China Producer Price Index 1996-2015
Productivity Gain: a huge potential
Technology will Play a Central Role
Historical High-tech leader
§  From 8th until 15th Century, China
was the world’s technological leader
§  Europe obtained most modernization
technologies from China between the
11th and early15th Centuries
§  Technologies include:
§ 
§ 
§ 
§ 
§ 
§ 
Porcelain (“Chinaware”)
Compass
Gunpowder
Moveable type and paper
Iron production (blast furnaces)
Naval technology (multi-mast, fixed rudder,
clocks)
§  In 1400, China had a sea-faring navy
able to travel around the world …
30 Scientific Production: Quality
31 Chinese International Patents Filings
§ 
§ 
ZTE, Huawei, No 2 & No 3 in 2014 for international patent filing
In top 15 for international filings: 5 Japanese, 4 Europeans, 2 US, 2 Koreans
Chinese Companies Technology Capabilities
are being Pushed
§  R&D Centers benefit from import tax exemption and tax reduction
§  Hi-Tech Status offers 15% corporate income tax (instead of 25%)
§  Science & Technology Budget is growing 20% per year
§  Grants are provided directly to innovative enterprises & start-ups
Eventually they will reach Korea’s, than Japan’s level
(but with more flexibility & creativity … )
A New Opportunity: Cross Border e-Commerce
No Product Registration, No Special Labeling, No …
§  E-commerce is adopted fastest in
China. On singles day, Alibaba
sold for USD 14 Bio. (in 1 day!),
60% more than the same day, a
year ago
§  Since 18 months cross-border ecommerce is possible
§  No registration, no specific
China requirements, no need to
set-up a company
§  No import tax/VAT for cheap
items!
En Résumé
Unfair Advantages will Diminish
(to a point)
§  Level playing field
§  No more corruption on government contracts
§  However:
§  Government innovation grants are most often provided only to
Chinese-owned companies (or joint-ventures)
§  Government tenders favor indigenous technologies and brands
Competition will grow further, keeping prices stable!
IP Infringement & Corrup5on The 1.5 Bio Consumer Market is Finally Arriving!
Thank You!
4. L'initiative Fribourg - Zhejiang
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Objectif de l'initiative
>  Offrir aux bénéficiaires une
opportunité de développer
leurs activités, nouvelles ou
existantes
>  sur le marché chinois en
général et dans la
Province de Zhejiang en
particulier
Initiative Fribourg-Zhejiang 2016
41 4. L'initiative Fribourg - Zhejiang
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Bénéficiaires
>  Toute entreprise sise dans le Canton de Fribourg
>  qui peut démontrer que l'initiative lui permettra de se diversifier et
d'innover, dans le but de maintenir ou de créer de nouveaux
emplois dans le Canton
>  Le projet sera élaboré avec le soutien de la Promotion économique et
soumis à la DEE pour approbation
>  Les projets regroupant plusieurs entreprises (approche cluster) seront
favorisés
>  p. ex. des sociétés du domaine alimentaire qui mettraient en
commun des ressources (logistique, distributeurs locaux) pour
commercialiser leurs produits
Initiative Fribourg-Zhejiang 2016
42 4. L'initiative Fribourg - Zhejiang
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Concept de l'initiative - généralités
>  La DEE met à disposition son réseau de contacts (Province Zhejiang)
>  contacts avec des entreprises, organisations, académies
>  résolution de problèmes administratifs, ...
>  La DEE partage une infrastructure (bureau, salle de conférence) mise à
sa disposition par la Promotion économique de la Province (ZIIPC), ou
le cas échéant par le Swiss Center Shanghai ou d'autres organisations
>  La DEE intègre un ou plusieurs représentant(s) de l'entreprise lors de
visites officielles aux autorités de la Province
Initiative Fribourg-Zhejiang 2016
43 4. L'initiative Fribourg - Zhejiang
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Concept de l'initiative - aspects financiers
La DEE prend en charge:
>  Jusqu'à 50% (mais au maximum
CHF 25'000) des coûts
d'accompagnement du projet par le
Swiss Center Shanghai, ou le cas
échéant par d'autres organisations
>  Coûts de l'infrastructure des locaux
partagés par projet pour:
>  un an au maximum
>  une place de travail (bureau)
Initiative Fribourg-Zhejiang 2016
44 4. L'initiative Fribourg - Zhejiang
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Prochaines étapes
>  Dès maintenant
>  Discussion des projets
bilatéralement avec PromFR
>  13-15 avril 2016
>  En cas d'intérêt et de projets
concrets, visite à Hangzhou/
Zhejiang d'une délégation emmenée
par M. le CE Beat Vonlanthen pour
lancer officiellement l'initiative
Initiative Fribourg-Zhejiang 2016
45 5. Questions / Réponses
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Initiative Fribourg-Zhejiang 2016
46 6. Merci de votre attention et gānbēi!
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Initiative Fribourg-Zhejiang 2016
47