Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Volume 30, 1 January 31 March 2006 Recent Business Highlights Value Chain Analysis launched in Sichuan; CHUEE energy efficiency project signing; Environmental Compliance Project launch meeting in Nanchong; West China Dairy Linkages Project being implemented; Final events of the China Development Marketplace; Xinjiang to learn from IFC-CPDF experience in SME management training; Roundtable discussion on banking certification; Symposium on Secured Transactions Reform in China; IFC-CPDF supports microfinance initiatives in China; IFC-CPDF delivers training to Chengdu CGC; Visitors James Adams, Warrick Smith, Peter Yee, Adil Cubukgil, Rema Hanna, Liliana De Sa, Nico J. Nissen, Harbinder Gosal, Peter Jensen, Irina Niederberger, Malcolm Harper, and Mark Nielsen. People Among Us Guofang LIU, Business Development Officer News From The Region Sichuan to become automobile manufacturing base; SM shopping mall to debut in Chengdu. Coming Up Soon Training of-trainers Instructional Design Workshop; Fact-finding mission to be conducted by PlaNet Finance; Workshop on lending to small business; Survey instrument for the PSD study to be tested; and First credit workshop for the CCB Capacity Building Project. 38783 1 of 9
Recent Business Highlights Business Enabling Environment Value Chain Analysis launched in Sichuan At the request of Deputy Governor Huang Xiaoxiang, the joint BEE program of FIAS and IFC-CPDF launched in January 2006 a Value Chain Analysis (VCA) project in Sichuan. The project aims to assist Sichuan in developing higher value-added agribusiness and electronics industries. Both sectors are strategically important for Sichuan. Since January, a joint team of international and local experts has worked intensively in the field, interviewing several dozens of companies and business associations in the two target sectors. These interviews served to identify the opportunities and challenges that the industries face. The team also interviewed a large number of relevant government agencies to seek their views and suggestions. The project is moving quickly into its second phase in which the team will explore practical ways to remove the key bottlenecks that were identified. The focus is on engaging private sector and government decision-makers to build the necessary consensus on priority needs and practical solutions. In the third phase, in April-May, the team will produce a report containing specific policy recommendations drawing from best practice examples internationally, nationally and locally. A stakeholder workshop planned in July will provide the opportunity for all involved private and public parties to discuss the recommendations and create mutually agreed action plans. (News contributed by Liu Guofang, Business Development Officer with the BEE team) Corporate Social Responsibility (CSR) Finland Contributes $3 Million to IFC China Energy Efficiency Initiative Finland's Ministry of Trade and Industry signed an agreement on March 7, 2006 to provide a $3 million contribution to the China Utility-Based Energy Efficiency Finance Program managed by IFC. The agreement is a major contribution to a project expected to have significant environmental impact through reduced pollution and greenhouse gas (GHG) emissions. This project is further supported by $16.5 million in guarantee and technical assistance funds from the Global Environment Fund (GEF). 2 of 9
IFC s China energy efficiency finance program aims to support over $150 million in energy efficiency projects and equipment investments by local SMEs, which is expected to lead to GHG reductions of about 5 to 10 million tons of CO2. The program provides both technical assistance such as engineering and marketing expertise and project/equipment loans through local commercial banks. (News contributed by Chen Rong, Business Development Officer with the CSR team) Environmental Compliance Project meeting in Nanchong The SME Environmental Compliance Project held its first discussion and training workshop in Nanchong, one of two pilot cities, on February 14. Local EPB officers explained in detail the enforcement procedures currently used and the constraints and difficulties encountered in their work. Committing their full support and participation, Nanchong EPB hopes that the Project could serve as a channel to communicate with Sichuan provincial EPB and national SEPA in Beijing in terms of effective environmental enforcement in the underdeveloped regions. IFC-CPDF and EPB enforcement officials discussed in detail plans for Project implementation with 7 representatives from 5 pilot private enterprises, including scope of assessment and next steps. The enterprise owners also briefed the team on environmental issues and expectations from the Project from the business perspective. (News contributed by Chen Rong, Business Development Officer with the CSR team) West China Dairy Linkages Project In January, the West China Dairy Linkages Project team organized an M&E design mission and conducted a training needs assessment. From January 8-16, M&E consultant Rema Hanna visited IFC-CPDF to conduct a design evaluation for the project. She had intensive discussions with the project team and client and visited dairy farmers in Sichuan and Yunnan. She concluded that the project design should allow impoverished farmers in these remote locations to access the know-how and skills that they need in order to improve their livelihood. The project also should be suitable for quasi-experimental random selection evaluation. The draft evaluation design will be finalized in consultation with the M&E team in Washington soon. From January 15-20, a group of dairy consultants led by Robert Watson also conducted a training needs assessment. The consultants visited the New Hope Dairy and Jule Dairy supply base in order to learn about current dairy farming practices of farmers and company milk supply staff. During a visit to Yunnan Province dairy farms, the consultants 3 of 9
concluded that farming practices in the province are among the poorest in China, and that the project is urgently needed by farmers and local technicians. The consultants will prepare the training agenda and materials according to results of the needs assessment. The first training session was held in Sichuan Province in mid February. (News contributed by Yi Qiyun, Business Development Officer with the CSR team) Final events of the China Development Marketplace... Having participated in three rounds of selection and a final jury process, IFC, through the support of the Corporate Citizenship Fund, has provided grants of US$23,000-30,000 to three innovative grass-roots poverty alleviation projects in rural China. One will involve training local small-scale farmers how to grow and sell mushrooms in Heilongjiang; another focuses on teaching impoverished women in Ziyang, Sichuan to rear pigs, grow gingko trees and sell the trees' harvest; and a third on helping Yi minority women in Liangshan, Sichuan to find stable income through the production and sale of local ethnic embroidery and other traditional products. The China Development Marketplace, an initiative of the World Bank to support and strengthen grassroots civil society organizations in China, chose "Supporting Innovations for Scaling-Up Services that Reach the Poor" as its theme, reflecting the joint efforts of the World Bank and the Government of China to work with civil society and mobilize all resources to fight poverty. (News contributed by Will Beloe, Business Development Officer with the Management Skills Development team) Management Skills Development Xinjiang to learn from IFC-CPDF experience In January 2006, the Ministry of Finance of China organized an IFC visit to Xinjiang to identify opportunities for investment and technical assistance activities in this remote Western province. A small delegation from IFC- CPDF joined the mission. Subsequently to this visit, a team from the XinJiang Economic and Trade Commission, SME Service Center, visited IFC-CPDF in February, followed by a visit from the IFC-CPDF Management Skills team to Urumqi in March. The IFC-CPDF team met with local Business Service Providers (BSPs) and local private enterprises in addition to the Economic and Trade Commission. Based on the information gathered from these discussions, IFC-CPDF is designing a cooperation agreement with the SME Service Center to build its capacity for developing the SME 4 of 9
management training and consulting market in Xinjiang. The next trip is planned in the latter part of May, during which IFC-CPDF will start delivering some of the courses and sharing the materials and experience gained in Sichuan. (News contributed by Will Beloe, Business Development Officer with the Management Skills Development team) Financial Sector Development Roundtable discussion on banking certification Weak staff skills and inadequate internal controls have long been barriers to China s financial sector development. In response, the China Banking Association (CBA), with the support of the China Banking Regulatory Commission (CBRC), has proposed to launch a nationwide banking certification program. Certification is widely regarded as an effective tool for members to adhere to high professional and ethical standards. IFC-CPDF has been requested to provide technical assistance to this effort. With the support of IFC- CPDF, CBA has engaged the Shanghai International Banking and Finance Institute (SIBFI) to assist in developing the certification program, with participation from industry representatives and academics. On January 12, 2006, IFC-CPDF and CBA held a roundtable discussion on the appropriate accreditation standards and examination syllabus for the first two pilot positions, i.e., Risk Management Officer and Financial Planner. A second review meeting was held on March 2-3, 2006, with about 40 representatives from state-owned, joint-stock, city commercial, and foreign banks, to solicit comments and opinions from these frontline professionals on the draft standards produced. These will be further refined based on inputs received. (News contributed by the Financial Sector Development team) Symposium on Secured Transactions Reform in China On January 10, 2006, IFC-CPDF together with FIAS and the People s Bank of China (PBOC), sponsored a symposium on Secured Transactions Reform in China. The purpose was to present findings of the joint working group from IFC-CPDF, FIAS and PBOC on China s current secured transactions regime and needed reforms. About 300 senior participants from commercial banks, academic institutions, government agencies, the Supreme Court, legislature, media, and other stakeholders attended the event. The symposium provided in-depth analysis of the current secured transactions regime in China and proposed a set of constructive suggestions for reform based on international best practice. The findings of the working group have been published in a book entitled Secured Transactions Reform and Credit Market Development in China. The book is now being distributed commercially, and is expected to help the 5 of 9
consensus-building process to facilitate implementation of the crucial reforms needed to make movable asset financing easier and more widely used in China. (News contributed by the Financial Sector Development team) IFC-CPDF supports microfinance initiatives in China Over the past two years, IFC-CPDF has helped disseminate microfinance best practice and potential for poverty reduction to various stakeholders in China, through the organization of several conferences and workshops. The Chinese authorities have recently allowed five Provinces to carry out pilots for developing commercially-oriented microfinance institutions (MFIs). IFC-CPDF has been requested to assist some of these pilots. In this context, the financial sector team and IFC investment colleagues paid a visit to several pilot projects in March 2006 to evaluate their potential for viability and TA support required. Together with the FDC of Australia, UNDP, GTZ, and the Finance Research Institute of the PBOC, IFC-CPDF also sponsored the Asia Microfinance Forum in Beijing on March 22-24. About 250 participants from China and other Asian countries attended the meeting. Subsequently, ACCION International and IFC-CPDF conducted a fact-finding mission to the Peng An MFI pilot which is slated for foreign investment. (News contributed by the Financial Sector Development team) IFC-CPDF delivered Financial Statement Reconstruction training to Chengdu CGC Two training workshops on "Financial Statement Reconstruction" were successfully delivered to Chengdu Credit Guarantee Company and its banking partners in March 2006. A Philippine expert and a Chinese trainer introduced the analytical framework for the reconstruction of financial information, case studies, and experience of a Chinese credit advisory firm. This topic is particularly important for SME lending where reliable financial statements are usually lacking. Concurrently to the training, an Information Memorandum for CGC was finalized in March, which is being used as the basis for its second capital increase. The company continues to perform very well. Cumulatively, it has issued 1,900 guarantees, supporting loans of over RMB 2.0 billion for some 400 SMEs. Demand for its guarantee services remains strong. IFC-CPDF is helping the company to seek additional capital. (News contributed by the Financial Sector Development team) Visitors to IFC-CPDF 6 of 9
Mr. James Adams, Vice President & Head of Network of the World Bank Group visited IFC-CPDF on Jan. 20. Mr. Peter Yee and Mr. Adil Cubukgil, international consultants, Ms. Liliana De Sa of IFC HQ, visited IFC-CPDF on Jan. 9-23 for the Sichuan Value Chain Analysis project. Ms. Rema Hanna, Assistant Professor at New York University, visited IFC-CPDF on Jan. 9 for the New Hope Dairy Project evaluation. Dr. Nico J. Nissen, a German consultant visited IFC-CPDF for the New Hope Dairy project on Feb.20-24. Ms. Harbinder Gosal, Business Development Office of CSM Special Projects visited IFC-CPDF on Feb.23-24 for sharing the experience on the first batch of Lessons of Experience in Technical Assistance Awards Program. Mr. Peter Jensen from AusAID visited IFC-CPDF on Feb.27. Ms. Irina Niederberger, Business Development Officer of Capacity Building Facility (CSMCB) visited IFC-CPDF from Feb.27 to Mar.4 for sharing lessons/findings coming from CBF evaluations. Mr. Malcolm Harper, an international consultant, visited IFC-CPDF on Mar.8-12, for BE global evaluation. Mr. Warrick P. Smith, Senior Regional Manager of Technical Assistance & Advisory Services, visited IFC-CPDF on Mar.16-17. Mr. Mark Nielsen, Senior Advisor of MPDF, visited IFC-CPDF on Mar. 27- April 6 for conducting Training of Master Trainer and Training of Trainer on Facilitation Skill and Instructional Design Workshop. People Among Us Guofang LIU Business Development Officer Mr. Guofang Liu joined IFC-CPDF in January 2006. He received a Masters Degree in Finance & Economics from Southampton University UK in 2005. Guofang also earned two bachelor degrees: one in Geology from Peking University in 1990, the other in International Politics from the People s University in Beijing in 1992. 7 of 9
Guofang joined Reference News as an editor in June, 1992. One year later, he left to work at the China Securities Journal where he was the director of the office of the editorin-chief for ten years. He joined Xiangcai Securities Company as the director of the Strategic Development Department in August, 2004. News From The Region Business Sichuan to be automobile manufacturing base Sichuan province is to build an automobile manufacturing base centered on Chengdu and backed by the secondary cities of Ziyang and Mianyang. The emphasis will be placed on the original equipment manufacturing of cars while the production of car parts is to be enhanced. It is expected that by 2010 the total value of the automobile manufacturing industry in the province will reach RMB 50 billion (6.2 billion USD) Business SM shopping mall to debut in Chengdu A shopping mall built by the SM Group will to open in October in Chengdu. The complex is located at the eastern second ring road, with a construction area of 170,000 square meters. Chengdu is the third city in China where SM has developed shopping mall complexes, after Xiamen and Jinjiang. Coming Up Soon Training of Trainers Instructional Design Workshop will start from April 4 6. PlaNet Finance will conduct a fact-finding mission to the Peng An MFI pilot at the end of April 2006. A workshop on lending to small business will be held in Nanjing on April 24-26. The survey instrument for the study on Chinese private enterprises sustainability performance will be tested in Jilin and Zhejiang Provinces. Under the CCB Capacity Building Project, the first credit workshop will be organized by CPDF and CBA in Beijing in June 2006. Mr. Lars Thunell, Executive Vice President of IFC, will visit Chengdu on 12 May 2006 to preside over the official launch ceremony for the second cycle or scaling up of CPDF. Mr. Thunell will also meet senior government and private sector 8 of 9
representatives in Sichuan. The visit is part of a one-week visit to China by Mr. Thunell, who assumed his new position as EVP of IFC in January 2006. Comments and/or quest ions? Contact us at: Mario Fischel Chunmei Zhao General Manager Team Assistant Tel: 86 28 8676 6622 Tel: 86 28 8676 6622 Fax: 86 28 8676 7362 Fax : 86 28 8676 7362 Email: mfischel@ifc.org Email: czhao@ifc.org 9 of 9