Doing Business in China Guide

The High Value Opportunities (HVO) programme

1) HEALTHCARE

China - Healthcare Sector Expansion (HVO CHN-14)
As part of its 12th Five year plan, which commenced in April 2011, China has allocated an RMB 850 billion stimulus package to facilitate the restructuring of its healthcare sector. This will offer a wide range of significant opportunities for UK companies.

The plan’s scope includes massive hospital and clinic construction, investment in R&D, expanded medical insurance and the potential for the introduction of new approaches to primary healthcare.

A total of over £3 billion worth of projects have been identified. China’s fiscal stimulus package, for example, contains 50 healthcare projects valued at some £2 billion. They include construction and/or renovation of 30 general hospitals at provincial level and within second tier cities, relocation of blood-banks and the establishment of research centres for specific diseases.

The percentage of these figures that will be available to UK industry remains hard to estimate. However, UKTI is developing a strategic approach to these opportunities that will provide systematic support to UK businesses engaged in the sector. This will include, information updates, inward and outward missions, political support and research services – in conjunction with their delivery Partners CBBC (China Britain Business Council).

More generally, there will be wider opportunities for further UK/China collaboration in healthcare arising out of China’s Healthcare Reform Plan, announced in 2009 which runs until 2020.

Some of these opportunities will come from the pharmaceutical and medical devices industry, where the Chinese government is promoting indigenous innovation under the Mega Drug Development Programme that forms part of the 12th Five-Year plan. Chinese industry is, therefore, coming under acute pressure to bring new products in to the development pipeline for later stage R&D and commercialisation. This offers partnership opportunities for UK businesses, working with Chinese counterparts, to jointly carry out the research and deliver products to market. IPR remains an issue facing all foreign (and increasingly domestic) companies but with the right support and advice from both UKTI and specialist lawyers these risks can be managed.

Further details on specific opportunities around this project will be provided as they become available. In the meantime, UK businesses interested in this project are encouraged to register their interest at: www.ukti.gov.uk/export

 

2) ENERGY

New Energy; £470 billion National New Energy Plan (HVO CHN-20)
UKTI is focusing on civil nuclear, wind, and smart grid developments. The value of the spending plan in these areas is estimated at RMB 3.5 trillion (£329 billion) from 2011-2020. China’s policies for new energy stem from concerns over future energy security, as well as environmental pressures.

The result is that policies and funding are being coordinated on the sector – including a ten-year (2011-2020) RMB 5 billion (£470 billion) Chinese government plan for new energy development from 2011-2020, covering seven sub sectors (wind, solar, nuclear, biomass, hydro, clean coal and smart grid).

UKTI’s focus is on three areas where the UK has the best capability match: civil nuclear, wind, and smart grid developments. The total value of the spending plan in these areas is estimated at RMB 3.5 trillion (£329 billion) over ten years.

Further details on specific opportunities will be provided as they become available. In the meantime, UK businesses interested in this project are encouraged to register their interest at: www.ukti.gov.uk  

 

3) URBAN DEVELOPMENT AND INFRASTRUCTURE

Chongqing-Liangiiang New Development Areas (HVO CHN-49)
A new economic development zone in China presents opportunities for UK companies in a range of sectors.

Chongqing, with a population of over 32 million people, and a key city for the strategy to develop western China, inaugurated the new economic development zone, Liangjiang on 18 June 2010. The zone is the 3rd State-level development zone in China after Shanghai Pudong and Tianjin Binhai.

The zone covers an area of 1200 square kilometres. The total value of investment is estimated to be around 700 billion RMB (£61 billion). Detail of the spending plans have not yet been confirmed, but are being investigated at government-to-government level. Identified projects so far include Bio Regional's one planet community and Two Rivers Technologies' (TRT) low carbon industrial zone. Other major infrastructure projects in the pipeline include airport and port expansion.

The central government’s development strategy for the zone has five key themes:

1.   Status of a pilot zone for balanced urban rural development.

2.   Chongqing aims to attract advanced manufacturing and service sectors

3.   Centre for innovative financial services

4.   Science and technology pilot base

5.   An experimental zone for policy development (eg regulations, standards, incentives etc).

Sectors of development include automotive (incl. low carbon), IT and white goods industry, modern logistics industry, data processing and cloud computing (to be largest data processing base in Asia), new industries (incl. new energy), rail transport and manufacturing, aerospace (incl. light aircraft & helicopters), and life sciences including pharmaceuticals .

Other opportunities in the zone include:

* ICT: TRNZ is keen to attract Jaguar Land Rover to set up a manufacturing unit in the Zone. TRNZ would like companies such as BT to set up off shore data processing and cloud computing centres.

* Aerospace: As mentioned above, Chongqing is keen to be the centre for helicopter production in China.

* New Energy: Wind and wave power industries are well established in Chongqing. Local companies are also keen to source wind and wave power technology from the UK.

* New Materials: TRNZ would like to organise workshops and events in the UK and Chongqing targeting SMEs that have capabilities in new materials such as carbon fibre and super conductive materials.

* Infrastructure: Design, planning, sustainable development/technologies.

Further details on specific opportunities around this project will be provided as they become available. In the meantime, UK businesses interested in this project are encouraged to register their interest at  www.ukti.gov.uk/export/countries/asiapacific/fareast/china/businessopportunity

New Beijing Airport (HVO CHN-50)
The building of a new airport in Beijing will present a number of opportunities for UK companies over the next few years.

The new Beijing airport is one of the key airport projects under China’s 12th Five-Year Plan (and under the national airport development plan), and on completion it will be the biggest airport in the world. The first phase, with is the current focus of the HVO project review, will result in capacity for up to 45 million passengers a year. It is estimated that the total investment will be over RMB 100 billion (£9.9 billion) by 2017 (the original schedule was for Phase 1 completion by 2015, but this has been delayed).

Based on the tendering documents for the design of the terminal, there are three phases of development planned:

• Near-term - with an annual passenger handling capacity of 45 million by operation in 2017;

• Mid-term - with an annual passenger handling capacity of 72 million by operation in 2025;

• Long-term - building scheme for the passenger terminal which can satisfy the annual passenger handling capacity of 100 million passengers (no specific year indicated, although a figure of 120 million has been reported).

As for the runway planning, there are four runways planned for the near term (no specific year indicated, but assumed to align with the 2017 capacity target) and three additional runways for the long term (no specific year indicated, but assumed to be from 2017-2025+. Some media reports suggest that there will eventually be nine runways in all, but this is unconfirmed).

Capital Airports Holding Company (CAHC, a state-owned company under the Civil Aviation Administration of China, CAAC) is planning to implement the Beijing New Airport Construction Project and has invited public bidding for the building design of the Beijing New Airport Passenger Terminal, and has set up the Beijing New Airport Construction Headquarters to manage the process. Seven joint ventures groups have pre-qualified, of which three are UK. (CAHC is also a stakeholder or owner of a number of other airports, including Chongqing Jiangbei airport, which is a project under the Chongqing Liangjiang HVO. Chongqing Airport Group is a CAHC group member.)

All these joint ventures presented their designs to a panel in Beijing on 20 December 2011. Since then no further announcement or updates have been released.

Although not specifically part of the above HVO, China Southern Airlines Co. Ltd will also invest RMB 30 billion (£2.9 billion) to build the China Southern Airlines Beijing Aviation Industry City at the southern part of Beijing, where the airport is to be located. It will include the operations base of China Southern Airlines, services for the airport, as well as a variety of aviation supply-chain businesses.

UK companies have been successful in architectural design, engineering, and supply chain activities in the airport sector in China, and there are close working relationships with the China Aviation Administration of China. Project access will be via tender (Civil Aviation Engineering Consulting Company or China “CAEC” – a member of CAHC group - is the appointed bidding agent for the terminal), joint ventures, and prime contractor relationships.

Further details on specific opportunities around this project will be provided as they become available. In the meantime, UK businesses interested in this project are encouraged to register their interest at: www.ukti.gov.uk/export/countries

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Source - UKTI

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