Vol.4 March 15, 2003

Recent Business Highlights New IS mandate signed with a local SME specialized in environmental projects;CPDF supports local credit guarantee firm to improve local SMEs' access to finance;Partnership forged to promote women enterprise development in Sichuan; andLaunch of SME management training program well received by local trainers.

Visitors To CPDF Maria Borrero, Jacquelyn Gates, Esther Hauert, Catherine Martin and Geoffrey Stevens

People Among Us Special edition for CPDF staff retreat in Lijiang, Yunnan Province

News From The Region China issues new interim standards for definition of SMEs in the country;Sichuan Government plans visit to South and East China to woo investments; andSurvey shows constraints on access to finance and qualified staff top SMEs' agenda.

Coming Up Soon CPDF to host investment seminar to educate local SMEs and government officials;

Local bank's capacity to be further strengthened through with IAS audit and TA; andThe official CPDF website will be launched in late March to reach wider audience.

Recent Business Highlights

Investment Service (IS)CPDF signs new mandate with a local SME to provide technical and financial advisory services …CPDF signed its seventh mandate in mid-February with Renfu Biological Environmental Protection Co., Ltd, a fast growing local SME focused on both waste water and solid waste treatment. The company designs and constructs such facilities, and has patented waste water treatment technology under the name BAF. The IS team will work with this firm to implement the Internal Enhancement Plan (IEP) to help the management to improve its operational and financial performance. Upon the completion of IEP, CPDF will provide to China Construction Bank Sichuan Branch, one of CPDF’s strategic partners in financial sector who introduced Renfu to the IFC-managed facility, its recommendation with regard to the risks inherent in the company’s business as well as its ability to repay the loan for which they have applied. (news contributed by William Beloe, BDO with IS team).

Capacity Building (CB)Local trainers take part in courses delivered by CPDF in collaboration with Canadian firm …CPDF concluded successfully the foundation level Train-The-Trainer (TTT) course from February 24 to 26 in Chengdu. This was the kick-off event for the SME Management Training Program designed to build local capacity to offer knowledge learning services to SME owners and managers. A total of fourteen local trainers from six training organizations, three of them public institutions and the rest private training & consulting firms, participated in this course. Upon the completion of this course, followed by two successful deliveries of management training services to local clients, co-designed by CPDF and a Canadian consulting and training company, these trainers will become CPDF’s certified

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trainers, who are expected to play a key role in ensuring the success of the program. (news contributed by Min Qiu, BDO with CB team)

Business Enabling Environment (BEE)Women association allies with CPDF to give empowerment to local women enterprises…

A Memorandum of Understanding was inked early March by CPDF and Sichuan Women Federation to lay down the foundation for full cooperation between the two organizations. The agreement spells out CPDF’s commitment to support Sichuan women SMEs, build local capacity for sustainable women enterprise development in the region and encourage the Federation to support

policy reforms to create a more favorable business environment for women enterprises, raise women's social status and create more jobs for women. CPDF is expected to provide services to local women enterprises as well as related business associations in areas of investment, capacity building and business enabling environment.

CPDF launches SME mapping exercise in two major cities in Sichuan Province…The field work was completed between March 6 and 14 in Chengdu and Yibin, consisting of a series of focus group discussions, individual interviews, and data collection. SME Mapping Sichuan is a sub-project under a CPDF initiative, which includes another two parts: SME Mapping Zhejiang and Sichuan-Zhejiang comparative study. The purpose of the mapping is to review the SME sector in Sichuan, an underdeveloped province in West China, and Zhejiang, a coastal province where private economy is booming, to determine their key constraints affecting SME activities and identify possible programs to be pursued by the WBG and external partners to address these constraints. The China Economy Research Center of Beijing University, one of the top research institution in the country, has participated in this mapping project. (news contributed by Min Qiu, BDO with CB team)

CPDF gives presentation on corporate social responsibilities at a local seminar…Irina Niederberger and Rong Chen from CPDF delivered a speech on Corporate Social Responsibility (CSR) on February 21 to more than 100 participants attending a local seminar organized by DFID under the British Government. During the presentation, Irina introduced to the audience IFC’s views on CSR from an investor’s perspective and how it links to the local SMEs in the region, while Rong explained IFC’s environmental/social policies and procedures that reflect its priority on sustainable development, in which CSR is a major component. They also took the opportunity to market CPDF and its services. (news contributed by Rong Chen, BDO with CB team)

Financial Sector (FS)CPDF sets to strengthen local credit firm with technical assistance and new equity mobilization…The partnership agreement, signed between CPDF and Chengdu Small Enterprise Credit Guarantee Company Limited (CGC), initially created with the support of DFID, one of the CPDF donors, mainly covers two areas of cooperation: mobilization of additional equity for CGC and institutional development of CGC. CPDF will commit itself to assist the local firm to bring in new equity by introducing donor organizations or other foreign and domestic institutions as strategic investors in order to optimize CGC’s shareholding structure and ease its capital constraints for further development, while providing technical assistance to strengthen CGC and its partner banks’ capability in project screening, credit evaluation and portfolio monitoring, improve operational process, internal control and risk management, and share with CGC best practice, lessons and experiences of credit guarantee. As a result of CPDF’s help, the Swiss Government has sent a staff to Chengdu to visit CGC and held discussions with its management and the Chengdu Municipal Government as well.

Visitors To CPDF

Ms. Maria Borrero from WBG’s Office of Mediation and Ms. Jacquelyn Gates from WBG’s Ethics Office stayed with all the CPDF staff from February 16 to 19 to deliver the “Living Our Values” courses, sharing with employees ways to uphold WBG values, skills to improve communications across the team, and methods to solve conflicts at work.

Ms. Esther Hauert Wermuth, who works with the Swiss Government's State Secretariat for Economic Affairs in charge of investment promotion in Asia, visited CPDF between February 20 and 21 to review and discuss, with CPDF management team, progress of CPDF initiatives and projects. On February 26, the management team of CPDF also met with Ms. Catherine Martin from British Government's DFID, another donor to CPDF.

Mr. Geoffrey Stevens, a Canadian consulting and training expert who have spent a lot of time to work with the WBG/IFC projects across the world, came to Chengdu in late February to help kick off the CPDF SME Management Training Program.

People Among Us

The Lijiang retreat in mid-February will remain an unforgettable memory for all the CPDF staff, who have enjoyed the shining sun, blue sky, nice food and exotic craftwork, in addition to the exciting team building experiences and valuable WBG training courses. And we are pleased to present the CPDF Award to the following personnel:

BEST Performer: Ms. Yaoli Tang (opera singer & retreat organizer) BEST Outfit: Mr. Eric Siew (cool hat & sunglasses)BEST Smile: Mr. Qiyun Yi (naive & charming)BEST Explorer: Mr. William T. Beloe (the toilet seat!)BEST Dancer: Mr. Jinchang Lai (beat everyone else!)BEST photographer: Ms. Wanjie Chen (just as professional)

News From The Region

Business – China issues interim definition on the country’s SMEs…According to the new definition released on February 19, 2003, SMEs in the manufacturing category shall employ less than 2,000 people, or realize annual turnover of no more than Rmb300 million, or have total assets of less than Rmb400 million; SMEs in the wholesale and retail sector shall employ less than 500 people or realize annual sales of Rmb150 million and SMEs in the transportation industry shall employ less than 3,000 people or realize annual sales of Rmb300. This is the second version of SME definition set by the country's central government since 1988.

Business – Sichuan government plans study tour to more developed regions…All newly elected senior government officials above city level in the province will join two delegations, headed by the new Sichuan Governor and Party Secretary respectively, to visit South China (Guangdong and Fujian provinces) and East China (Shanghai, Zhejiang and Jiangsu provinces), where the GDP figures stay the highest in the nation and private economy has been booming. A series of seminars and meetings will be held with local private sector leaders as well as business associations in a bid to woo investments from these two regions.

Business – Recent survey identifies two major problems faced by local SMEs…The survey, conducted by Sichuan Statistics Bureau, showed that about 62.3% of the 318 local SMEs interviewed still view bank loans as the only source to provide the financing they need. Nearly 60% of the respondents list “technical talent” their most wanted staff, while only 32.7% of the SMEs think they need to find qualified managerial personnel first. Accordingly, 8.2% of the firms surveyed say they pay much higher salaries to technical professionals, and 38.4% say their technicians receive slightly higher salaries than managerial and administrative staff.

Coming Up Soon

CPDF will work with Sichuan Provincial Investment Promotion Bureau and West China Investment Consultants LLC, the latter managing a IFC-invested SME fund, to jointly sponsor a “International Investment Forum” on March 25, 2003, in Chengdu. More than 350 people from local SMEs and government agencies are expected to participate in the forum.

PwC, the largest international auditing firm in the world, is being engaged by the end of March to conduct an International Accounting Standard audit on Chengdu City Commercial Bank (CCCB), one of CPDF’s major financial institution partners. More technical assistance is also expected for the local bank to strengthen and expand its businesses targeting SMEs. Last year, CCCB’s number of SME borrowers increased by an impressive 800.

The first official CPDF website (http://www.cpdf.org) is expected to be launched in the end of March. It will offer both English and Chinese language versions to ensure that it reaches a wide range of audience. A local web developer will help design the website.