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China Business Summit 2005

China's Next Phase of Modernization: Creating Scientific and Sustainable Solutions
Beijing, China 9-10 September

On this page:
 China pursues strategies to promote international and domestic development
 Building the Chinese multinational
 Banks must undergo "stringent" reforms to compete in an open market
 China Inc.'s march abroad
 Currency reform forces corporate structural changes
 Asian business responds to AIDS crisis
 More on Cheng Siwei's comments and the World Economic Forum's IP programme



10 September

China pursues strategies to promote international and domestic development ― China is actively forging closer regional and global ties that promote prosperity and peace. "China is open to be a more vibrant player working with countries in and outside the region for win-win results," Lv Guozeng, Assistant Minister of Foreign Affairs of China told over 600 business, political and civil society leaders on the closing day of the World Economic Forum"s China Business Summit 2005.

"China's development is not a threat but an opportunity for the Asian community and the rest of the world," Lv assured the domestic and international leaders in the packed plenary session, stressing China's commitment to its policy of a "peaceful rise".

There is vast scope for "synergies and opportunities for win-win cooperation with China", agreed Alan Larson, Senior Strategic Adviser and Director, World Economic Forum and Former US Deputy Secretary of State. Negative perceptions of China's rapid rise, he warned, need to be dispelled so that China could be viewed as a partner.

"The growth in China is having a positive impact and I think governments must be proactive if we are to take advantage of these opportunities," said Kevin Falcon, Minister of Transportation, Province of British Columbia, Canada.

Building the Chinese multinational ― China's entry to the WTO has created a new economic order, according to Zhou Zhongshu, President, China Minmetals Corporation of China. Chinese companies, he said, have to reform their practices to international standards. "Now, it's necessary to have macro regulations and a change of policy at the government level to help Chinese multinationals go global."

Chinese companies should employ a "borderless theory", urged Bian Huaduo, Vice-Chairman, Jiangsu Far East Group Co. of China. "Instead of competing with companies, we need an innovative mindset that sees the importance of competing across every link of the value chain," he said.

Chinese multinationals face cultural challenges that expanding Indian companies do not, such as politically-determined strategy and different management standards, observed Edward Tian, President, China Netcom (Group) Corporation of China. "Just as it has taken 20 years for economic reforms to take shape," he said, "it may be another 20 years for Chinese multinationals to develop. There is a long way to go, but I have confidence it will happen."

More on Cheng Siwei's comments and the World Economic Forum's IP programme ― "We need a 'Chinese Nasdaq' to further develop the market. The current Shenzhen Board has around 50 listed companies but we recognize this is too few and we are encouraging further development," said Cheng Siwei , Vice-Chairman, Standing Committee, National People's Congress, China, during a private working group session of Financial Services and IT/Telecom executives taking part in the World Economic Forum's Industry Partnership Programme.

This discussion took place as part of an ongoing workstream focusing on "Nurturing the Early Stage Investment Climate", one of the working groups within the World Economic Forum's Financial Services and IT/Telecom Industry Partnership programme.

For the IT/Telecoms sector, this session also concluded a programme of private activities between business leaders and subject experts that explored potential scenarios for China's future over the next 20 years, and in this context, the challenges and opportunities related to senior management talent and intellectual property.

"The Industry Partners activities at the China Business Summit sets the foundation for our next stage of analysis with our partner companies, where a set of strategic recommendations on how the IT/Telecoms industry should address these challenges will be developed for discussion among our Industry Partners CEO community during the Annual Meeting 2006", said Alex Wong, Director, Information, Communications, and Entertainment Industries.

The Industry Partnership programme is an exclusive community of global companies who define and address critical issues through a shared learning and action-oriented platform. It not only integrates the best of the Forum's existing industry-oriented efforts, but broadens this involvement beyond the CEO to the organization's senior leadership team, and introduces a shared structure for generating and sharing cutting edge insight content and research.


9 September

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Banks must undergo "stringent" reforms to compete in an open market ― Chinese banks must implement stringent reforms if they are to withstand the competition from foreign banks that will have open access to the Chinese market from 2007 under World Trade Organization rules.

“As a result of the reforms, management and corporate governance standards will improve and so will the financial performance of Chinese banks,” Wang Zhaoxing, Assistant Chairman, China Banking Regulatory Commission, People's Republic of China, told more than 600 business, political and civil society leaders on the opening day of the World Economic Forum’s China Business Summit 2005.

“The banking sector is entering a critical stage and it is important it is healthier,” Wang warned. The Commission has focused attention on helping China’s banks to improve their game, but Wang appealed for the “support and patience” of the international community.

China Inc.'s march abroad ― For Chinese companies, going global has been the hottest trend as evidenced by international newspaper reports on high-profile globalization moves such as the IBM-Lenovo deal and the failed CNOOC-Unocal deal.

Arthur Yeung, Philips Chair Professor of Human Resource Management, China Europe International Business School (CEIBS) in China, stated that such moves are prompting observers to ask, "How ready are these Chinese firms to go global? What are their competitive strengths and weaknesses?"

Norman Sze, Managing Partner, Consulting, China, Deloitte in China, said that "most companies are not ready. In terms of management and experience they are not experienced". However, he does not discourage companies from "going out to really learn in the world".

Panellists praised the Lenovo-IBM deal as an example of a Chinese company going abroad in a smart way. With a shareholding structure incorporating the Chinese side, IBM and venture capitalists, it can be called a "Sino-American company", Edward Tse, Managing Director, Booz Allen Hamilton, asserted.

Currency reform forces corporate structural changes ― The revaluation of the Chinese currency is forcing companies to implement changes to improve competitiveness. Ma Delun, Assistant Governor of the People's Bank of China told participants on the opening day of the China Business Summit 2005 that "the central bank will give consideration to firms who need to adapt to the floating exchange rate environment".

Upgrading infrastructure to improve innovation, increasing productivity, hedging risk better and improving governance are among the changes Chinese firms need to make, Ma said, as they can no longer rely on price.

"Different businesses will require different adjustment periods," for example, machine exports working on high-end products will take longer to adjust than the retail industry.

"The more gradual you make the process the less the pain," observed, Jonathan Anderson, Head, Asia Pacific Economics, UBS, "and so you won't see a serious negative impact of the exchange rate reform on business".

Session summary


Asian business responds to AIDS crisis ― The first-ever survey of the Asian business response to HIV/AIDS shows that firms in Asia are beginning to take preventive actions against the impact of HIV/AIDS.

The results of a survey, carried out by the World Economic Forum’s Global Health Initiative, in partnership with Harvard University, American Foundation for AIDS Research and UNAIDS, are being shared for the first time today at the China Business Summit 2005 in Beijing.

Report (PDF; 46 pgs; 565k) I Press release



Co-Chairs

Peter Bakker, Chief Executive Officer, TNT, Netherlands
Kong Dan, Vice-Chairman and President, China International Trust and Investment Corporation (CITIC), People's Republic of China
William R. Rhodes, Senior Vice-Chairman, Citigroup, and Chairman, Citicorp/Citibank, USA
Michael Wareing, International Chief Executive Officer, KPMG, UK
Zhou Zhongshu, President, China Minmetals Corporation, People's Republic of China
Zhu Jimin, Chairman of the Board of Directors, Shougang Group, People's Republic of China

For more information, please contact china@weforum.org