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CHINA IN TOMORROW’S WORLD

Thoughts on the Emerging New Dynamics of Globalisation

International Forum Meeting – Gonville and Caius College – May 23rd 2009

Professor Alan Barrell

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Trinity College’s History and Scientific Development – Cambridge

Pride

• Trinity had a strong scientific tradition*

• First use of the word “scientist” 1835 (Whewell)

• First European Science Park – 1970 – Dr. Sir John Bradfield

*Alumni include Newton, Clerk-Maxwell, Rayleigh,Thomson, Walton, Rutherford, Aston, Lyle, both Braggs, Bohr, Hopkins, Klug, Kendrew

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A PreviewA Preview

• China – Historical Perspectives and Personal Thoughts

• What’s happening in The WorldThe World ?- Current trends and predictions

•• EntrepreneurshipEntrepreneurship – Mindset for The FutureMindset for The Future• A New BalanceNew Balance and a New World OrderNew World Order• Is China Ready for World LeadershipWorld Leadership ? – and

The Challenges for ChinaThe Challenges for China• The Vision of Vision of A World Without Borders A World Without Borders and

some concluding inspiration – for the next generation

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Casting an Eye on the World’s Financial Crisis – What’s changed ? And is it the BIGGEST CRISIS?....

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Who said these words and When

“I believe the banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake up homeless on the continent their fathers conquered”

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Who said these words and When

“I believe the banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake up homeless on the continent their fathers conquered”

Thomas Jefferson 1778

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And what about these…

“The budget should be balanced, the Treasury should be replenished, Public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed, lest our Nation become bankrupt. People must again learn to work, instead of living on public assistance”

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And what about these…

“The budget should be balanced, the Treasury should be replenished, Public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed, lest our Nation become bankrupt. People must again learn to work, instead of living on public assistance”

Marcus Cicero 55 BC

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Situations are what WE make them !....

It was the bestbest of times, it was the worstworst of times….It was the age of wisdom,wisdom, it was the age of foolishnessfoolishness..It was the epoch of belief,belief, it was the epoch of incredulityincredulityIt was the season of Light,Light, it was the season of DarknessDarknessIt was the spring of hopehope, it was the winter of despairdespair….We had everything everything before us, we had nothingnothing before us

We were all going direct to heavendirect to heaven, we were all going direct to ““the other placethe other place””

Charles Dickens – “A Tale of two Cities” 1859

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Global Financial Crisis - How did one survive?

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But….what’s the BIGGEST CRISIS ?

• The Financial Crisis?…..The CREDIT CRUNCH

• The Climate Crisis ?...... The CARBON CRUNCH

• The Energy Crisis ?...... The OIL CRUNCH

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aa

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Projected Increase in UK Summer TemperaturesProjected Increase in UK Summer Temperatures

observationsobservationsHadCM3 MediumHadCM3 Medium--High (SRES A2)High (SRES A2)

20032003

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Climate Change Climate Change and Conflictand Conflict

–– Tens of millions of people Tens of millions of people displaceddisplaced

•• Low lying deltaic areasLow lying deltaic areas•• Small Island StatesSmall Island States

–– Food shortages where with Food shortages where with hunger and famine todayhunger and famine today

–– Water shortages in areas Water shortages in areas already with water shortagesalready with water shortages

–– Natural resources depleted withNatural resources depleted withloss of ecological goods and servicesloss of ecological goods and services

–– Increased incidence of diseaseIncreased incidence of disease–– Increased incidence of severe weather events Increased incidence of severe weather events

Climate Change, coupled with other stresses, can lead to local aClimate Change, coupled with other stresses, can lead to local and nd regional conflict and migration depending on the social, economiregional conflict and migration depending on the social, economic and c and

political circumstancespolitical circumstances

WBGU 2007

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What we DO know is that LOTS of change is happening in the World….

EnvironmentIssues

The death ofdeference

New employmentpatterns

Organisations

Globalisation

Technology

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The World in Transformation – Changes coming ever Faster

• Speed of Communication – Removal of Distance• Globalisation – and EU Enlargement – 27 Countries half a

billion people• Sources of Security• Flattening of Structures – Networks not Hierarchies• Entrepreneurial Opportunities• Impact of Technology• New Skills Learning• Permanent “temps”• Shifting Values and Changing Social Structures• Rise of Asian Superpowers – China and India – and

developments in South America and Eastern Europe.• Great Environmental conflicts and problems….

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Changes in Industrial Structure - UK % of Total Employment - UK Government Foresight Report

0102030405060708090

100

1971 1981 1991 2001 2011

Manufacturing

All Services

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Changes in Industrial Structure - Europe % of Total Employment

0102030405060708090

100

1971 1981 1991 2001 2011

Manufacturing

All Services

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The Changing Face of Globalisation – Realities for Europe, US and The World

• Two fifths of the Worlds people live in the two fastest growing large economies – China and India – FACT

• Education, Wealth Creation and New Knowledge are at the heart of Economic Planning in Asia

• Growth in Asia is far ahead of Europe.

• The desire to LEAD is strong in Asia

• CASH is in place in the Asian economies – as well as brainpower.

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Manufacturing has Migrated !Migrated !

Courtesy of Asia Pacific Foundation

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The West’s Competition ??

Courtesy of Asia Pacific Foundation

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The Competitive Threat “Today’s Peacock is tomorrow’s feather duster” –

Think about it……..

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Sources of Competitiveness

Creativity Risk

Speed Reputation

Cost Values

Learning Information

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Some Economic Indicators – How are key Countries doing?

• Can the trend continue?• What if China pulls out of US $ - moving its reserves?• Do the Trade Balance differences matter? – India and China?

GDP % Change Ind. Prod. % Trade BalanceUS $ Bn

Foreign ReservesUS $ Bn

China + 9.5 + 8.9 +60 2.0 TrillionsAnd growing!

India + 8.6 + 8.0 - 25 160

Britain + 2.9 + 0.1 - 49

Euro Area + 2.1 + 1.0 + 86

USA + 3.9 + 3.5 - 679

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India/China Vs The G6

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Innovation and the Impact of Technology -Traffic in one day in 2003:

All international phone calls1971

All airline passengers1975

All mobile phones 1984

All emails1992

All SMS1998Source: Analysys, World Bank and ITU

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Three Converging Revolutions Three Pervasive Technology Platforms

BIO TECH Pharmaceuticals

Diagnostics Research/Info

Tools Industrial

Genomics Bioinformatics

Proteomics

INFO TECH Hardware Software

Communications

NANO TECH Electrical Structural

Biomedical Energy & Environment

Biosensors BiochipsBioelectronics

Microfluidics Nanobiotechnology

Drug Delivery

Nanodevices Nanosensors

Nanoelectronics

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Innovation, Invention, Science and Technology

“90% of all the scientists born in

the human race are alive today”

Prof. John Story - INSEAD

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• Universities and centres of academic excellence• Entrepreneurs with marketable ideas and products

• Business angels and established seed funds

• Sources of early stage venture capital

• Core of successful large companies

• Quality management teams and talent

• Supportive infrastructure

• Affordable space for growing businesses

• Access to capital markets

• Attractive living environment and accommodation

source :- Gibbons - Stanford University 1998

Characteristics for high technology Regionsegions

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Who likes HEROES ? Are Innovators Heroes ?

The Spirit of Exploration and Adventure

Thinking of Change and Innovation -Is History helpful ? Thinking of a few great Innovators….change agents….

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Do HEROES change World ? – what are they good at? ……could it be….

• Exploring……• Discovering….• Risking………• Believing…….• Creating……..• Changing…….• Enabling……..• Visualising…..

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A REAL Hero….he changed the WORLD ! From a prison cell

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A Hero’s Home for 18 Years….Could WE have survived it ?

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Familiar Face….

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Heroes are usually Controversial….

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Heroes can show Humility

“BE the Change you want to see in the World”….

Mahatma Ghandi

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How BIG is the World ?

“The World is big enough for everyone’s

needs – but it is too small for the GREED of

one man !”

Mahatma Gandhi

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A Hero with ImaginationImagination….

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Einstein on IMAGINATION….

“Imagination is more important than knowledge. Knowledge is limited. Imagination encircles the world”

Albert Einstein 1879 - 1955

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“You look at things and ask - why? but I dream of

things that never were and ask -

George Bernard Shaw

why not?”

So who and what are these Entrepreneurs ? What makes an Entrepreneur ? Is it a way of thinking

A Mindset ?A Mindset ?

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Who ever heard of Albert-Szent-Gyorgyi ?

He, a Nobel Laureate said………

“Creativity is no more than looking at the same thing as everyone else and

thinking something different.”

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Discovery comes from within…through seeking…….

• “The Source of Real Discovery consists not in seeking new Landscapes …..

• But in having NEW EYES”

Marcel Proust

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Schumpeter (1911) on Entrepreneurs

“Entrepreneurs blow gales of creative destruction.”

Role of the entrepreneur in transforming economies by developing:

• New products• New methods of production• New ways of organizing• Untapped raw materials• Enhanced competitive performance

Josef Schumpeter Vienna 1911

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Entrepreneurs CHANGE the World ……sometimes NOT by design or on purpose…….

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The drivers for change….Socio-Political….Entrepreneurial Influence ??....

(Prof Shai Vyakarnam – Cambridge 2008)

Berlin WallHasselhof China

India MigrationsWithin and intoEurope

SingleEconomic system

Completely new marketsIs there a shift in

economic centre of gravity?

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More examples….Entrepreneurship and People / Society

Making a united Europe a reality

Transforming lives of the poor

Democratising knowledge – “Education Without Borders” – “Liberate Minds”

Creating breakthrough technology enterprises

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Are we nurturing “Prepared Minds”?

“Where observation is concerned,

Chance favours only the prepared mind”

Louis Pasteur - 1854

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Leadership, Vision and Achievement – Balancing Vision with Plans and Action

• Vision without Action is a Daydream….

• Action without vision is a Nightmare….

Japanese Proverb – Anon

And how about mistakes ?....

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Knowing when Imaginative Ideas may be successfully employed….

“There is nothing more powerful than an

idea whose time has come”

Jules Verne

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Would you invest in this team ? – Do they look imaginative enough?....Do they look risky? Was their

time right when this picture was taken?

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Yes- appearances can be deceptive….those who risked investing in them made a lot of $$$$$$. And their ideas

changed the World ! Their time had come !....Their time had come !....

Microsoft Corporation, 1978

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And so to CHINA….

Two more Chinese Heroes – who changed the World……to introduce some facts, realities, thoughts and personal views on

China in TomorrowChina in Tomorrow’’s Worlds World

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Confucius and “imagining the middle way”….

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““To get rich is To get rich is GLORIOUSGLORIOUS””

Deng Xiaoping 1982

And a more recent Chinese Hero

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中国 (zhong guo)

“The Middle Kingdom”:“The centre of the world”?

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““To To Impartially Impartially

Adhere to the Adhere to the Middle WayMiddle Way””

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The Book of History

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““允执厥中允执厥中”” ““To Impartially To Impartially Adhere to the Adhere to the Middle WayMiddle Way””

Emperor Yu

Emperor Shun

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The Phenomenon of Ancient China – Creativity and Inventiveness – some of the Inventions – but did

they innovate?....

• The first lamps• Magnetic Compass• The Camera• Gunpowder• Paper for writing• Printing• Iron and Steel Smelting• Copper and Bronze ware• Oil Drilling and Production• Coal Mining• Pottery and Porcelain• Wine making and tea and tea culture• Early Astronomy• Sericulture – gave us Silk• Seismography• Traditional Medicine and Anaesthetics• Acupunture• Vaccination against Smallpox• The Hot Air Balloon• The Soushi Calendar• Decimal and Binary Mathematics

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Why do some in the West worry about a strong and growing China ?

Do they suspect…. A Growing Sense of Power and

Superiority +

Newly Acquired Economic Power =

Threat to the World!?

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My understanding – in China, still today…. A Philosophy that

Seeks to Avoid Extremes

and Hold a Balanced, Moderate Position.

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Lets put MODERN CHINA into our picture and context….Some of China’s Achievements

• Compound growth of GDP at 9% since 1995, sixth in the world

• One of top 10 trading nations • The most popular FDI destination• The largest mobile phone market • The second largest PC market • The third largest advertising market

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Engineering & Technology Resource

Source: Issues in Science & Engineering, Spring, 2007

Four-Year Bachelor Degrees in Engineering, Computer Science and Information Technology

0

100,000

200,000

300,000

400,000

500,000

600,000

2000 2001 2002 2003 2004 2005

Deg

rees

aw

arde

d

USA India China China 50%

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Engineering & Technology PhD degrees

Source: Issues in Science & Engineering, Spring, 2007

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China’s Urbanization

• 1993: 28%• 2004: 42%

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Growth Potentials

• China's semiconductor market is growing 18-20% year on year

• Laptop PCs enjoyed the fastest growth of 39% in 2002 and will continue at similar speed in 2003

• Mobile phone users have been increasing at 5 mln per month

• The number of Internet users is expected to double over the next 5 years

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World’s Top 10 Trading Nations in 2005

Source: Hong Kong Marine Department

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Automobiles Sales in China (1978-2007)

0

2

4

6

8

10

1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

Aut

omob

iles

Sale

s (m

illio

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China Grew While We Relaxed – a Canadian Perspective

2007 Canadian Vehicle Sales

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0

50

100

150

200

250

300

350

400

450

500

Fixed line Mobile

(Mill

ion) Dec-00

Oct-06

Telecom Growth in China

CAGR = 21%

CAGR = 40%

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China’s High Technology Plan 863 Priorities (1)

• ICT• Biotechnology and

pharmaceuticals• New materials• Advanced energy systems• Resources and

environmental

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China’s High Technology Plan 863 Priorities (2)

• Advanced agriculture• Advanced manufacturing• Ocean technology• Global monitoring and

aeronautics

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Chinese Rocketry and Space Exploration

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The Market for Everything

• Urban population 450 mln, 160 cities over 1mln

• Emerging of middle class • Privatisation of housing• Increasing attention to

well-beings• Availability of Internet

• Enormous market for FMCG

• lifestyle products • Home improvement• Healthcare and fitness

products• E-learning services

Western type of consumerism is mainly driven by 15-25 years age group (70 mln)

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The World’s Factory

China already produces:

• 60% of world’s toys• 55% of world’s shoes• 60% of world’s air-conditioners • 60% of world’s microwave ovens

Now more cars, laptops, ICs, mobile phones…

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What Can China Offer? – Entrepreneurial Potential is great

• 750 mln people live in the countryside

• Returning overseas students and local MBAs

• Science and Engineering students on the rise

• Increasing usage of ISO accredited process

• Easy access to other Asian markets

• unlimited supply of cheap labour

• Local management talent more available

• R&D localisation become feasible

• Quality of outsourced manufacturing

• Convenient re-export base

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Potential of China - Healthcare

• Land area comparable to US• Huge population as consumers• Major economic giant• Major internal market

China Healthcare has more than • 320,000 healthcare institutions• 75,000 hospitalsOver 20 biotech parks covering • Shanghai• Beijing• Guangzhou• Shenzhen • Chengdu• WuhanFurther examples Biotech/PharmaProduction facilities development in• Pudong, Shanghai; Hangzhou,

Zheijang ProvinceChina is one of the world’s largestsupplier of raw materials to pharma

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And in Pharmaceuticals -

China -Seventh Largest Pharmaceutical Market 2005 – now Fifth

Top 10 1996 2000 2005 20101 US US US US2 Japan Japan Japan Japan3 Germany Germany Germany Germany4 France France France France5 Italy UK UK China6 Brazil Italy Italy UK7 UK China China Italy8 Spain Brazil Brazil Canada9 Korea Canada Canada Spain

10 Canada Spain Spain Brazil

11 China

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Biotechnology Market in China• Biotech in China started in

1984 • Initially concentrated on

agribio - food security• Medical biotech has

developed gradually• Biotech and TCM synergy

• In 2002, China’s biotech market was $2.4bn

• Predicted 2008 - $10bn• Participation in the Human

Genome (HGP) & International Rice Genome Sequencing Project (IRGSP)

• Now a major biotech player in Asia

Approx 600 companies in 2000- Estimate 2008 1,500

$2.4bn sales in 2000

Source:ArgosBiotech, 2003

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Key Geographical Areas – Biotech and TCM – Traditional Chinese Medicine

Centres for TCM

Human Genome & Genetics

AcademyKey Clinical Research

Centers

Biotech/Pharma Prodn,Pudong

Biotech Research Park, Guangzhou

Biopharm

Park,Xi’an

University

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• Telecoms, information technology• Transportation, power generation• Chemicals and petrochemicals • Bio-tech • Agriculture/ food processing

UK and China ….UK Capabilities fit well with China's priorities areas

Potential opportunities also with:Consumer goods, environment and pollution control, healthcare, education and training, and financial services

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Success factors for Working with China – Advice to prospective Western Partners….

• Leading-edge technologies available in China – and Chinese companies looking for top technology too

• Quality & customer service – the ethos is embedded now• Local supply chain – needs to be checked• Local partners/employees – the KEY!• Cultural Understanding Can you “think like Chinese?”• Regional focus – China is a BIG country – study regional

expertise• Consensus among UK employees – be honest and clear!• Commitment from the top management• Long-term perspective + acceptable return on investment

– Patience

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Many positive trends…but – China has Environmental Challenges as well as Opportunities

– A lot to do !....

• 40% of cities face water shortages• Soil erosion on 37% of country’s land mass• Serious acid (<pH 5.6) rain in 41% of cities• US$125 billion environmental spending by

2010 (similar to the forecast investment in the Alberta Tar Sand projects)

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And there are other big ChallengesChallenges

• Imperative of continued Economic growth• Stresses of continued Urbanisation• Social and Community issues • Cultural and Political evolution as

Education reaches more of the populace• “Liberating minds”• “Go Abroad” Philosophy and Policy• Leadership, Government, Governance and

Regulation.

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ModernModern China has risen as a result of its

learning from the West.

What can the West learn

from China?

PACIFIC OCEANChina

USA

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Globalisation, China, The West and Opportunity Opportunity – Exploiting DiversityExploiting Diversity – Cultural Exchange and

Understanding

EnvironmentIssues

The death ofdeference

New employmentpatterns

Organisations

Globalisation

Technology

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Opennessand trust

Clear jointobjectives

Long-termRelationship

Proactivenot Reactive

Top-Levelcommitment

Involvement ofrelevant disciplines

Flexibility

Working Together

Total QualityManagement

PartnershipsPartnerships-Never Easy!Impossible without Tolerance and Cultural Understanding – but the best way forward

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“Brainpower and Brain Circulation”- Building Structures to develop Knowledge and Skills – and

spreading the Spirit of EnterpriseSpirit of Enterprise Worldwide

Transparency and Open Innovation

Vision of “A World without Borders

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Our “Can Do” summing up….for The Next Generation….and moving towards A World A World

Without BordersWithout BordersIMAGINE AND HAVE VISION

CREATEINNOVATE

INVENT“WORLDTHINK” – GLOBAL VIEW

ACQUIRE KNOWLEDGEPLAN AND PRACTICE

NETWORK! NETWORK!INSPIRE OTHERS

TRUST AND RESPECTENJOY!

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In In Pursuit of Excellence !of Excellence !

“Excellence can be achieved, if we: Care more than others think is wise, Risk more than others think is safe,

Dream more than others think is practical, Expect more than others think is possible.”

Deborah Johnson-Ross

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Write on my Blog – if you want to say more about A World Without Borders….

……and for more information……

www.alanbarrell.com

alan@alanbarrell.com