Reader's Digest > 26 January - 10 February

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Reader's Digest, 26 January  - 10 February

Swiss and Chinese Business Related News in Switzerland and China


China and Switzerland Sign AEO Agreement
Published by, 31st January 2017
China and Switzerland have signed a customs agreement on mutual authorized economic operator (AEO) status, a move that will further boost bilateral trade and economic cooperation, the country's top customs authority said. Chinese companies that obtain the AEO status will enjoy the same simplified customs procedures as native Swiss companies when their products enter Switzerland, the General Administration of Customs said in a statement on its website. According to the World Customs Organization (WCO), an AEO is an organization or company involved in the international movement of goods that has been certified by, or on behalf of, a national customs administration and complies with WCO or equivalent supply chain security standards. China and Switzerland launched AEO negotiations at the start of 2015, and finally reached the agreement this month after three rounds of talks. AEO programs are expected to play a key role in boosting the country's exports amid sluggish global demand, according the statement. China's exports dipped 2% year on year to RMB 13.84 trillion last year, while imports rose 0.6% from one year earlier to RMB 10.49 trillion.

Chinese Ambassador to Switzerland Paid a Visit to President of the Swiss Confederation
Published by, 25th January 2017
On 24 January, The Chinese Ambassador to Switzerland Mr. Geng Wenbing paid a visit to the President of Swiss Confederation, Ms. Doris Leuthard. The President Leuthard spoke highly of President Xi Jinping's state visit to Switzerland and expressed her willingness to continue maintain the high-level exchanges and further develop the strategic partnership between two countries. The Ambassador Geng appreciated President Leuthard and the Swiss Federal Council for the special and well-planned reception of President Xi Jinping's visit to Switzerland. He expressed his willingness to maintain close contact with the Swiss side and implement the outcome of Xi's visit to Switzerland to promote the development of bilateral relations to a higher level.
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Chinese Corporate Spending Spree Benefits Switzerland
Published by, 7th February 2017
Investments by Chinese companies in Switzerland quadrupled last year to reach USD 4.8 billion (CHF4.8 billion), according to research from consultants Baker McKenzie. The report excludes the proposed USD 43 billion takeover of Syngenta by ChemChina, which still awaits final regulatory approval. To put that mega-deal into perspective, Chinese foreign direct investment (FDI) in the whole of Europe totalled USD 46 billion in 2016 (up 90% on 2015) and USD 48 billion (+189%) in North America, says Baker McKenzie. Last year, China’s HNA Aviation Group snapped up Swiss air transport support companies Gategroup and ST Technics. The Chinese company had previously bought Swissport. Other significant deals in recent years include the takeover of iconic aluminium bottle maker Sigg by Haers Vacuum Containers. Other Chinese companies have invested in Switzerland without taking over Swiss firms. Leading Chinese software company Neusoft has run its European headquarters from Appenzell since 2009. Speaking to at the World Economic Forum last month, Neusoft chairman Liu Jiren said to expect more Chinese FDI in the coming years as they sought to diversify into cutting-edge service sectors.

Pharma Strong, Watches Weak: Swiss Exports to China Remain on High Level
Published by, 31st January 2017
Swiss exports to China (including Hong Kong) remain on a high level: According to recent figures of the Swiss Federal Customs Administration, Switzerland exported goods in the value of CHF 14.69 billion to the Middle Kingdom in 2016. This number is almost identical with the exports achieved a year earlier, CHF 14.67 billion. Switzerland is one of the very few countries that do not export natural resources and enjoy a positive trade balance with China including Hong Kong. The surplus amounts to CHF 1.3 billion, explains Nicolas Musy, Founder and Delegate of the Board of Swiss Centers in China, a non-profit organization that lowers the market entry barriers of Swiss companies into Asia. Swiss know-how and high quality products are increasingly important for quickly growing sectors of the Chinese economy, such as advanced manufacturing, pharma and medical devices as well as high and sustainable technologies, emphasizes Mr. Musy. Worldwide Swiss exports gained 3.8% in 2016, with Germany (39.7 bio CHF, +8.3%) and the United States (31.4 bio CHF, + 14.6%) remaining the biggest markets for Swiss goods. China (including Hong Kong, 14.69 bio CHF) continues to be the third biggest market, followed by France (14 bio CHF, +0.8%) and Italy (12.7 bio CHF, -0.9%).

China's Five-Year Plan as an Opportunity for Swiss Companies
Published by, 25th January 2017
With its current five-year plan, China's government is pursuing ambitious goals for growth and diversification. For Swiss companies, this opens up opportunities in the areas of water management, food security and robotics. China's five-year plans define the country's social, economic and political goals for the relevant period. This is also true of the thirteenth five-year plan, the first from the government of President Xi Jinping. While the world's second-biggest economy has seen a slight slowing down of its economic growth over the last few years, the new five-year plan continues to set high goals: the gross national product is set to grow by 6.5 % annually. At the same time, the country is aiming to implement a new development concept that combines growth together with social and political reforms. Just how China wants to balance out its growth strategy and reforms remains to be seen. The international investors certainly appear enthusiastic. Reforms for suppliers, innovation, technological upgrading, competition, improved efficiency and the reduction of dependency on fossil fuels promise some outstanding opportunities. In Switzerland, several thousand companies operate in the area of waste water management, with many producing technical systems or components for waste water treatment. Local Chinese actors are continually on the hunt for Swiss technologies, and if Swiss companies are able to connect up with them, then countless opportunities are opened up.

u-blox Acquires SIMCom Cellular Module Product Line
Published by, 25th January 2017
u‑blox (SIX: UBXN), a global leader in wireless and positioning modules and chips, announced an asset deal with Shanghai‑based SimTech Group Company Ltd. that will give u‑blox control over the company’s cellular modem products (known as SIMCom Wireless), patents and know‑how, R&D and sales staff, and customer base. The deal significantly expands u‑blox’s existing cellular product range and makes it a major supplier of cellular modules worldwide. The acquisition firmly establishes u‑blox as a leader for a range of 2G, 3G and 4G products and creates new economies of scale. The acquisition of SIMCom’s product portfolio offers additional solution options and price points which will widen u‑blox’s customer base and increase its geographical reach. The deal significantly increases the cellular module business in Asia, primarily China, and generates increased revenue in Europe and America. The larger scale will also provide the eventual opportunity to incorporate the recently announced u‑blox’s cellular chips into select modules in the combined portfolio.

Swiss Rail Group Moves ahead with ‘One Belt, One Road’ Intercontinental Services
Published by, 18th January 2017
As one of the foreign participants in the "One Belt, One Road" initiative, InterRail Holding AG, a Swiss freight rail services provider, has been working closely with China Railway Corp's subsidiary China Railway Container Transport Group, and moved more than 100,000 20-foot equivalent container units from China to European and Central Asian destinations. Global Times reporter recently interviewed its director Michael Albert. InterRail Holding AG has had offices in China, the Commonwealth of Independent States (CIS) countries and European countries for many years. In 2012, InterRail participated in some of the first train projects from China to Europe. It original main business involved two-way services between the EU and the CIS, and between China and the CIS. Now, they can connect these areas and offer an intercontinental train product. Albert stated that Switzerland with its limited market size is still not the main target for many Chinese companies. They considered the visit of President Xi Jinping was intended to improve conditions for Chinese companies. Companies that are being active in e-commerce might find opportunities there.
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Happy Atmosphere of Chinese Lunar New Year Permeates in Switzerland
Published by, 25th January 2017
"Happy the Year of the Rooster!" a Swiss bodyguard greeted a Chinese reporter in Chinese at the Palace of Nations, as the holiday atmosphere of China's Spring Festival has been infiltrating the central European country. At the largest Swiss army knife store in Geneva, a limited edition of a army knife inlaid with a gilded rooster is on hot sale. The rooster is raising its head and crowing, with full of energy. World-renowned Swiss watch brands also launched their souvenir editions of rooster watches. While many parts of the world are celebrating the Chinese Lunar New Year, which began on Feb. 28, a Chinese new year reception hosted by Ma Zhaoxu, Ambassador Extraordinary and Plenipotentiary and Permanent Representative, Permanent Mission of the People's Republic of China to the United Nations Office at Geneva and other International Organizations in Switzerland, has attracted more than 200 Chinese employees and overseas Chinese. Many people resonated with the speech given by WHO Director-General Margaret Chan, who said that Chinese President Xi Jinping's successful visit to Switzerland in January, which happened at a time when the world is faced with multiple difficulties and challenges, sufficiently proved that China is a big country that delivers on commitments.
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Two Swiss Universities are World’s ‘Most International’ in New Rankings
Published by, 1st February 2017
The Swiss Federal Institute of Technology in Zurich or ETH Zurich, and the École Polytechnique Fédérale de Lausanne have come out tops in Times Higher Education’s “The World’s Most International Universities 2017” ranking, reports Study International. Times Higher Education, or THE, ranked 150 institutions that feature in the top 500 of the THE World University Rankings 2016-17. The ranking’s methodology is drawn largely from the ‘international outlook’ pillar, which consists, in equal weightage, of a university’s proportions of international students, international staff and journal publications with at least one international co-author. A consistent feature of the institutions that topped the rankings were the “prominence of universities from relatively small, export-reliant countries, where English is an official language or is widely spoken”, according to THE. Following Switzerland, two Asian universities emerged top at third and fourth place respectively: the University of Hong Kong and the National University of Singapore. Billy Wong, THE’s data scientist says that this may reflect the fact that nations such as Hong Kong, Singapore and Switzerland are all “big, global trading hubs”, conditioned to look beyond their borders for personnel and ideas. Another university in Hong Kong, the Chinese University of Hong Kong also ranks highly, at 27th place.

Tsinghua University and the University of Geneva Start Comprehensive Cooperation
Published by, 20th January 2017
On 16 January, President Xi Jinping of China and the President of the Swiss Confederation, Doris Leuthard, jointly witnessed the signing of the memorandum between Tsinghua University and the University of Geneva on comprehensive cooperation on SDGs (Sustainable Development Goals). The signing of this agreement marks the start of all-round cooperation between the two universities on joint training of students, advanced joint research, and the joint construction of a SDGs research center. With the signing, a solid step was taken for the two countries to cooperate on global problems in sustainable development.
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Engineering / Manufacturing

Swiss Power Group ABB Halts Order Decline with Small Fourth-Quarter Rise
Published by, 8th February 2017
Swiss power and automation group ABB snapped a two-year order decline in the fourth quarter due to improvements in its U.S. and China markets, but said uncertainties in the global market had left it unsure of maintaining the recovery. Chief Executive Ulrich Spiesshofer said macroeconomic and geopolitical developments made him cautious about calling the orders improvement a turning point, even as the maker of products ranging from transformers to industrial robots said the outlook in the United States and China was looking brighter. "We will absolutely sustain the ambition to drive the order momentum going forward, but what the markets give us I cannot say in this uncertain world," Spiesshofer told reporters on a call. "The world is full of uncertainties at the moment." ABB said orders, an indicator of future profit, rose 0.2% to USD 8.277 billion in the three months ended 31 December from the same period a year earlier, helped by improvements in the United States and China, its two biggest markets.

Syngenta Forces Hedgies to Read Chinese Tea Leaves
Published by, 28th January 2017
Syngenta has hedge funds sifting Chinese tea leaves. A sharp shift in sentiment over the Swiss agribusiness group's USD 43 billion sale to ChemChina, the state-backed giant, shows how Beijing's influence complicates life for merger arbitrageurs. It's almost exactly a year since the acquisitive ChemChina, known formally as China National Chemical Corp, unveiled plans for the country's largest-ever foreign takeover. Despite this being an agreed, friendly deal with committed financing, it has been a rocky ride. While some important watchdogs, notably in Brussels, have not yet given the go-ahead, Western approval processes have been trundling forward relatively smoothly. And the deal doesn't pose particularly grave antitrust problems. Meanwhile, though, arbs have been scouring Chinese news outlets for hints on how the deal is seen in Beijing.
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Bank / Finance / Insurance

UBS Expects No Change in China's Benchmark Interest Rates in 2017
Published by, 28th January 2017
UBS expects no change in China's benchmark interest rates in 2017 based on the anticipated moderation of raw material prices and inflation levels. Although China's producer price index (PPI), a measure of inflation at wholesale level, turned positive for the first time since February 2012 and its momentum remained strong, "we think raw material prices will moderate and the weakness of PPI-to-CPI (consumer price index) transmission should help keep CPI growth at an average 2.3% in 2017," below the government's likely full-year target of 3%, UBS economist Wang Tao said in a report. Wang said, as a result, the likelihood that China's central bank would raise the benchmark interest rates was low, especially given the country's still high debt servicing burden. To stabilize the debt level and contain financial risks, Wang said the government will try to gradually lower both its M2, a broad measure of money supply that covers cash in circulation and all deposits, and credit growth this year. Wang expected the government to set this year's M2 growth target at 11%, lower than the 13% target set for 2016. China's economy grew 6.7% year on year in 2016. The government vowed to further advance supply-side structural reform and ensure that the economy operates within a reasonable range this year.
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Hospitality / Tourism / Retails

Swatch Annual Profit Plunges, Targets Return to "Healthy Growth"
Published by, 2nd February 2017
Swatch Group cut its dividend after weak sales and high fixed costs at the world's biggest watchmaker drove annual profit sharply lower, although it held out the prospect of a return to "healthy growth" this year. Swiss watchmakers have been hurt by declining sales in their biggest markets, Hong Kong and the United States, and tourist shoppers avoiding Europe for fear of extremist attacks, but recently mainland China sales turned the corner. "Based on the positive development of the last three months, healthy growth is expected for the year 2017," the company, based in Biel in western Switzerland, said in a statement on Thursday, pointing to a turnaround in mainland China over the last three months. Net profit at the maker of Omega and Longines watches slumped 47% to a worse-than-expected CHF 593 million (USD 598.9 million), reflecting the company's reluctance to cut costs. The operating profit margin slid to 10.7%, from 17.2%. Some investors have been critical of Swatch CEO Nick Hayek for the reliability of his forecasts and a plan to expand into launching a battery for electric vehicles.
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Legal / Trade / Consulting / Services

What Should We Expect from China?
Published by, 28th January 2017
What Should We Expect from China? Is the country heading for an economic crisis? Is the new leadership reformist? Or Maoist? The answer to these questions is particularly critical in this new era of unpredictability in the West, not only to envisage the future of the most populous nation on earth, but also to predict the economic well-being of the rest of the world. Paradoxically, even though risks and uncertainty are building up, China’s best time is probably yet to come, only if China succeeds in its turnaround. This time, however, the challenges keep accumulating and the stakes are higher than usual! Despite its much publicized slow down, China accounts for an estimated 50% of world growth. When one takes note of the economic uncertainty for Europe, compounded by Brexit, the general weakening of the European Union, the instability created by the conflicts in the Middle East, and the unheard-of unpredictability of the new US administration, an economic crash in China could be the start of a new global crisis. As a result, understanding what to expect from China becomes a crucial part of evaluating how well our economies and businesses will be able to progress.

Interview "Design to Achieve Business Goals" with “The Business Cuisine”
Published by, 26th January 2017
5 Star Plus has been invited to an interview with The Business Cuisine, a platform focusing on entrepreneurship and innovation in the Food & Beverage industry in China. Denise Chen, founder of The Business Cuisine, sat down with Barbara Seidelmann, founder and managing director of 5 Star Plus Retail Design, to discuss how retail design should be used by brands to achieve their strategic business goals. Key points to take away from the interview are that design needs to be very functional, fulfill the business requirements and should be planned strategically. Often enough, store designs do not have a comprehensive enough understanding of the retailer's or restaurants' operational processes and focus on the aesthetic aspects only. When starting to develop a store design concept, both owners and designers first have to be clear on the business concept, the positioning, target customers and the marketing strategy before thinking about how to translate the brand concept into a three-dimensional space.

China Courts Energy Trader Mercuria in Bid to Revamp State Firms
Published by, 26th January 2017
China is roping in one of the world’s biggest independent energy traders to help revamp its sprawling and inefficient state-owned enterprises. Xiao Yaqing, the head of China’s State-owned Assets Supervision and Administration Commission, met with Han Jin, the president of Mercuria Asia Group in Beijing on 24 January, according to a statement on SASAC’s website. The regulator said it hopes the trading company will help it reform government-controlled firms and raise their profitability. Revamping state-owned enterprises is critical to President Xi Jinping’s policy of moving the USD 10 trillion economy away from an over-reliance on debt-fueled infrastructure investment and exports to one powered more by services and consumer spending. The so-called SOEs, spanning from power companies to train makers to banks, have traditionally been a source of political patronage and economic power for the Communist Party. China has embraced mergers for the overhaul, with deals worth billions announced since late 2014.
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