CKGSB Knowledge - China Business and Economy Summer 2019

China is now unquestionably a key player in global affairs, but to become a world superpower the country will need to continue developing and refining its policies. Changes are already occurring across a variety of sectors, and innovation is occurring on a scale the world has never seen before. In this issue of CKGSB Knowledge, we explore how China is catching up to international standards, with two of our stories following developments within specific sectors. “Shelter for Innovation” (page 11) looks at the development of patent protection in China, an issue that has been a longstanding concern for foreign companies operating in the world’s second-largest economy. “From Passion to Impact” (page 43) examines China’s growing philanthropic sector, the role corporate social responsibility programs are playing in charitable giving in the country…

A decade ago, most venture capital (VC) investments in China were led by foreign funds. Today, the vast majority are led by Chinese VC funds and foreign capital is hardly seen. It’s a turnaround that has big implications for China’s growing tech sector and for its integration with the rest of the world. On Forbes’ most recent list of top 100 venture capitalists globally, Chinese investors snagged 21 of the places, up from 17 last year. Importantly those VC funds and their activities were not focused on Silicon Valley but on ventures in China. Decades of economic reforms in China have given high-quality startups the opportunity to thrive, and also provided rich prospects for investors. A yearslong swell of venture capital activity in the country has created a number of so-called “unicorns”—privately-held…

In late April, China’s Ministry of Public Security launched one of the most dramatic piracy busts in its history. Over the course of a few hours, police in the eastern city of Yangzhou rounded up a huge crime ring suspected of selling bootlegged versions of a string of hit movies, took 251 people into custody, shut down 361 websites and seized seven servers that had been used to create high-definition copies of dozens of films. A Public Security Bureau (PSB) official estimated that the pirates had cost online streaming sites and film companies $117 million in lost revenue. The South China Morning Post called the move “an apparent bid to support [Beijing’s] claim it has tightened protection of intellectual property ahead of trade talks.” But the arrests were actually more likely part…

BASF, the largest chemicals producer in the world, has made bold moves to increase its presence in the Asia-Pacific region, placing a particular focus on China. The German company announced in July last year that it would invest $10 billion into a new production site in Zhanjiang, located in the southern province of Guangdong. Then in October it revealed plans to expand its integrated production site in Nanjing, which was established in 2000 as a 50:50 joint venture with the state-owned Chinese firm Sinopec. BASF is renowned for its Verbund sites, a German term referring to a large-scale, highly-integrated chemical production complex. The principle of the Verbund concept is to add value through the efficient use of resources. Stephan Kothrade has led two such sites, one in Antwerp, Belgium, and another one…

China’s outbound investment has fallen dramatically off its highs, with the days of massive growth in Chinese investments around the world clearly over, at least for now. The sudden pullback in China’s non-financial outward direct investment (ODI) in the past couple of years follows a series of policy shifts and further strengthening of controls on the movement of capital abroad. After reaching its peak in 2016, China’s ODI took a 30% nosedive in 2017—its biggest drop since 2003. That was followed by meager growth of 0.3% in 2018 for a total of $129.8 billion and then another drop of 1.1% year-on-year in the first quarter of 2019. From a regional perspective, the changes are even more dramatic. In 2018, Chinese ODI into North America and Europe fell by a combined 73%, with total…

Parag Khanna is an Indian-American specialist in international relations and the founder and managing partner of data and scenario based strategic advisory firm FutureMap. Khanna is the author of several bestselling books, with his latest being The Future is Asian: Commerce, Conflict & Culture in the 21st Century. With a Ph.D from the London School of Economics, Khanna was previously an adviser to former US President Barack Obama as well as the US National Intelligence Council’s Global Trends 2030 program. He has also served in Iraq and Afghanistan as a senior geopolitical adviser to the United States special operations forces. With Asia’s rise to global prominence, many have questions as to what the future of this multicultural continent that links 5 billion people through trade, finance, infrastructure and diplomatic networks will look…