1. Opportunities in 2 nd and 3 rd tier Cities Netherland Business Support Offices Bas Ovetooom Chief Representative of the NBSO in Dalian May, 2014

2. Living in the city 2 The Economist 26 April 2014 Source: Economist Intelligent Unit

3. Upcomings regions 3 WHY – 2 nd TIER - Focus of Urbanization - Lower costs - Less competition - Different needs - Fastest growth PosProvinceAvg. GDP growth (08-12) 1 Shaanxi14.59% 2 Chongqing14.52% 3 Hubei14.45% 4 Ningxia14.23% 5 Anhui14.23% 6 Guizhou13.98% 7 Tianjin13.92% 8 Hunan13.90% 9 Hainan13.70% 10 Sichuan13.63% 11 Inner Mongolia13.33% 13 Jilin13.19% 16 Fujian12.73% 17 Liaoning12.70% 22 Jiangsu11.78% 27 Shandong10.09% 28 Zhejiang10.06% 29 Beijing9.97% 30 Guangdong9.17% 31 Shanghai7.48% National average11.58% Source: National Bureau of Statistics of China Source: Economist Intelligent Unit

4. China’s new ‘hubs’ 4 *Logistic hubs * Knowledge hubs * Retail hubs (middle-class) * Different timing / stages of development * Overall challenges: Transportation, Education, Pollution & Healthcare Source: Economist Intelligent Unit

5. Pro’s and Con’s – 2nd tier vs 1st tier 5 Advantages “Chinese” investment environment Even small/medium company receives attention Lower salaries Less restrictions on production/manufacturing projects Lower costs for purchase and rent of land and buildings Less competition Disadvantages “Chinese” investment environment Less “foreign-investment friendly” Less established administration Less knowledge of law and complex transactions Higher risk of corruption Lower qualification of staff Less legal certainty Living environment expats

6. Pro’s and Con’s – 2nd tier vs 1st tier 6 Advantages “Chinese” investment environment Even small/medium company receives attention Lower salaries Less restrictions on production/manufacturing projects Lower costs for purchase and rent of land and buildings Less competition Disadvantages “Chinese” investment environment Less “foreign-investment friendly” Less established administration Less knowledge of law and complex transactions Higher risk of corruption Lower qualification of staff Less legal certainty Living environment expats WHERE IS YOUR MARKET

7. China – Netherlands Business Support Offices 7 NBSOs - Hands-on support in new areas - Part of Embassy network - Local government contacts - Local business network - Market knowledge - Language & culture expertise Location NBSOs in China - Chengdu, Sichuan (8 th pos GDP) - Dalian, Liaoning (7 th pos GDP) - Jinan, Shandong (3 rd pos GDP) - Nanjing, Jiangsu (2 nd pos GDP) - Qingdao, Shandong (3 rd pos GDP) - Wuhan, Hubei (9 th pos GDP)

8. Liaoning – the North East 8 The old industrial base Revitalization of the North-East program (2003) Sectors Equipment manufacturing / heavy industry Shipping building Mining IT Outsourcing Agri-food Luxury market (Shenyang & Dalian) Automotive Petro-chemical Current developments High-speed train Airport developments 5 points-one-line program Shenyang bigger metropolitan area Heilongjiang Jilin Liaoning Dalian Shenyang Changchun Harbin 400km 300km 250km Population: 27 m GDP : Eur 138b Population: 38 m GDP : Eur 158b Population: 44 m GDP : Eur 287b

9. Manufacturing – new trends in this sector 9 - Focus on development High tech - Up the value chain - Environmental issues start to play a stronger role - Strong increase labor costs - Growing automation in manufacturing processes - More focus on the domestic market - More international collaborations - Collaboration/ownership European R&D -‘Branding’ is becoming more important (slowly) China PMI 2012-2014 Source: Economist Intelligent Unit Source: Markit Economics