Slide 1 CHINA IN TOMORROW’S WORLD Thoughts on the Emerging New Dynamics of Globalisation International Forum Meeting – Gonville and Caius College – May 23 rd 2009 Professor Alan Barrell

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Slide 4 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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Slide 11 A Preview China – Historical Perspectives and Personal Thoughts The WorldWhat’s happening in The World ?- Current trends and predictions EntrepreneurshipMindset for The FutureEntrepreneurship – Mindset for The Future New BalanceNew World OrderA New Balance and a New World Order World Leadership The Challenges for ChinaIs China Ready for World Leadership ? – and The Challenges for China Vision of A World Without BordersThe Vision of A World Without Borders and some concluding inspiration – for the next generation

Slide 12 Casting an Eye on the World’s Financial Crisis – What’s changed ? And is it the BIGGEST CRISIS?....

Slide 13 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”

Slide 14 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

Slide 15 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”

Slide 16 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

Slide 17 Situations are what WE make them !.... bestworst It was the best of times, it was the worst of times…. wisdom,foolishness It was the age of wisdom, it was the age of foolishness.. belief,incredulity It was the epoch of belief, it was the epoch of incredulity Light,Darkness It was the season of Light, it was the season of Darkness hopedespair It was the spring of hope, it was the winter of despair…. everything nothing We had everything before us, we had nothing before us direct to heaven “the other place” We were all going direct to heaven, we were all going direct to “the other place” Charles Dickens – “A Tale of two Cities” 1859

Slide 18 Global Financial Crisis - How did one survive?

Slide 19 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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Slide 21 Projected Increase in UK Summer Temperatures observations observations HadCM3 Medium-High (SRES A2) HadCM3 Medium-High (SRES A2) s 2040s 2060s 2060s Temperature anomaly (wrt ) °C Temperature anomaly (wrt ) °C

Slide 22 Climate Change and Conflict –Tens of millions of people displaced Low lying deltaic areasLow lying deltaic areas Small Island StatesSmall Island States –Food shortages where with hunger and famine today –Water shortages in areas already with water shortages –Natural resources depleted with loss of ecological goods and services –Increased incidence of disease –Increased incidence of severe weather events Climate Change, coupled with other stresses, can lead to local and regional conflict and migration depending on the social, economic and political circumstances WBGU 2007

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Slide 25 What we DO know is that LOTS of change is happening in the World…. Environment Issues The death of deference New employment patterns Organisations Globalisation Technology

Slide 26 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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Slide 29 Changes in Industrial Structure - UK % of Total Employment - UK Government Foresight Report

Slide 30 Changes in Industrial Structure - Europe % of Total Employment

Slide 31 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.

Slide 32 Migrated ! Manufacturing has Migrated ! Courtesy of Asia Pacific Foundation

Slide 33 The West’s Competition ?? Courtesy of Asia Pacific Foundation

Slide 34 The Competitive Threat “Today’s Peacock is tomorrow’s feather duster” – Think about it……..

Slide 35 Sources of Competitiveness Creativity Risk Speed Reputation Cost Values Learning Information

Slide 36 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 % ChangeInd. Prod. %Trade Balance US $ Bn Foreign Reserves US $ Bn China Trillions And growing! India Britain Euro Area USA

Slide 37 India/China Vs The G6

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Slide 41 Innovation and the Impact of Technology -Traffic in one day in 2003: All international phone calls 1971 All airline passengers 1975 All mobile phones 1984 All s 1992 All SMS 1998 Source: Analysys, World Bank and ITU

Slide 42 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 Biochips Bioelectronics Microfluidics Nanobiotechnology Drug Delivery Nanodevices Nanosensors Nanoelectronics

Slide 43 Innovation, Invention, Science and Technology “90% of all the scientists born in the human race are alive today” Prof. John Story - INSEAD

Slide 45 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 egions Characteristics for high technology Regions

Slide 46 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….

Slide 47 Do HEROES change World ? – what are they good at? ……could it be…. Exploring…… Discovering…. Risking……… Believing……. Creating…….. Changing……. Enabling…….. Visualising…..

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Slide 52 A REAL Hero….he changed the WORLD ! From a prison cell

Slide 53 A Hero’s Home for 18 Years….Could WE have survived it ?

Slide 54 Familiar Face….

Slide 55 Heroes are usually Controversial….

Slide 56 Heroes can show Humility “BE the Change you want to see in the World”…. Mahatma Ghandi

Slide 57 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

Slide 58 Imagination A Hero with Imagination….

Slide 59 Einstein on IMAGINATION…. “Imagination is more important than knowledge. Knowledge is limited. Imagination encircles the world” Albert Einstein

Slide 60 “You look at things and ask - why? but I dream of things that never were and ask - George Bernard Shaw why not?” A Mindset ? So who and what are these Entrepreneurs ? What makes an Entrepreneur ? Is it a way of thinking A Mindset ?

Slide 61 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.”

Slide 62 Discovery comes from within…through seeking……. “The Source of Real Discovery consists not in seeking new Landscapes ….. But in having NEW EYES” Marcel Proust

Slide 63 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

Slide 64 Entrepreneurs CHANGE the World ……sometimes NOT by design or on purpose…….

Slide 65 The drivers for change….Socio-Political….Entrepreneurial Influence ??.... (Prof Shai Vyakarnam – Cambridge 2008) Berlin Wall Hasselhof China India Migrations Within and into Europe Single Economic system Completely new markets Is there a shift in economic centre of gravity?

Slide 66 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

Slide 67 Are we nurturing “Prepared Minds”? “Where observation is concerned, Chance favours only the prepared mind” Louis Pasteur

Slide 68 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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Slide 70 Knowing when Imaginative Ideas may be successfully employed…. “There is nothing more powerful than an idea whose time has come” Jules Verne

Slide 71 Would you invest in this team ? – Do they look imaginative enough?....Do they look risky? Was their time right when this picture was taken?

Slide 72 Their time had come !.... 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 !.... Microsoft Corporation, 1978

Slide 73 And so to CHINA…. Two more Chinese Heroes – who changed the World……to introduce some facts, realities, thoughts and personal views on China in Tomorrow’s World

Slide 74 Confucius and “imagining the middle way”….

Slide 75 “To get rich is GLORIOUS” Deng Xiaoping 1982 And a more recent Chinese Hero

Slide 76 中国 (zhong guo) “The Middle Kingdom”: “The centre of the world”?

Slide 77 “To Impartially Adhere to the Middle Way”

Slide 78 The Book of History

Slide 79 “允执厥中” “To Impartially Adhere to the Middle Way” Emperor Yu Emperor Shun

Slide 80 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

Slide 81 中 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!?

Slide 82 中 My understanding – in China, still today …. A Philosophy that Seeks to Avoid Extremes and Hold a Balanced, Moderate Position.

Slide 83 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

Slide 84 Engineering & Technology Resource Source: Issues in Science & Engineering, Spring, 2007

Slide 85 Engineering & Technology PhD degrees Source: Issues in Science & Engineering, Spring, 2007

Slide 86 China’s Urbanization 1993:28% 2004:42%

Slide 87 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

Slide 88 World’s Top 10 Trading Nations in 2005 Source: Hong Kong Marine Department

Slide 89 China Grew While We Relaxed – a Canadian Perspective 2007 Canadian Vehicle Sales

Slide 90 Telecom Growth in China CAGR = 21% CAGR = 40%

Slide 91 China’s High Technology Plan 863 Priorities (1) ICT Biotechnology and pharmaceuticals New materials Advanced energy systems Resources and environmental

Slide 92 China’s High Technology Plan 863 Priorities (2) Advanced agriculture Advanced manufacturing Ocean technology Global monitoring and aeronautics

Slide 93 Chinese Rocketry and Space Exploration

Slide 94 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 years age group (70 mln)

Slide 95 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…

Slide 96 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

Slide 97 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 hospitals Over 20 biotech parks covering Shanghai Beijing Guangzhou Shenzhen Chengdu Wuhan Further examples Biotech/Pharma Production facilities development in Pudong, Shanghai; Hangzhou, Zheijang Province China is one of the world’s largest supplier of raw materials to pharma

Slide 98 And in Pharmaceuticals - China -Seventh Largest Pharmaceutical Market 2005 – now Fifth Top US 2Japan 3Germany 4France 5ItalyUK China 6BrazilItaly UK 7 China Italy 8SpainBrazil Canada 9KoreaCanada Spain 10CanadaSpain Brazil 11China

Slide 99 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 $10bn Participation in the Human Genome (HGP) & International Rice Genome Sequencing Project (IRGSP) Now a major biotech player in Asia Approx 600 companies in Estimate ,500 $2.4bn sales in 2000 Source:ArgosBiotech, 2003

Slide 100 Key Geographical Areas – Biotech and TCM – Traditional Chinese Medicine Centres for TCM Human Genome & Genetics Academy Key Clinical Research Centers Biotech/Pharma Prodn,Pudong Biotech Research Park, Guangzhou Biopharm Park,Xi ’ an University

Slide 101 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

Slide 102 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

Slide 103 Many positive trends…but – China has Environmental Challenges as well as Opportunities – A lot to do ! % 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)

Slide 104 Challenges And there are other big Challenges 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.

Slide 105 Modern China has risen as a result of its learning from the West. What can the West learn from China? PACIFIC OCEAN China USA

Slide 106 Opportunity Exploiting Diversity Globalisation, China, The West and Opportunity – Exploiting Diversity – Cultural Exchange and Understanding Environment Issues The death of deference New employment patterns Organisations Globalisation Technology

Slide 107 Openness and trust Clear joint objectives Long-term Relationship Proactive not Reactive Top-Level commitment Involvement of relevant disciplines Flexibility Working Together Total Quality Management Partnerships Partnerships-Never Easy! Impossible without Tolerance and Cultural Understanding – but the best way forward

Slide 108 Spirit of Enterprise “Brainpower and Brain Circulation”- Building Structures to develop Knowledge and Skills – and spreading the Spirit of Enterprise Worldwide Transparency and Open Innovation Vision of “A World without Borders

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Slide 111 A World Without Borders Our “Can Do” summing up….for The Next Generation….and moving towards A World Without Borders IMAGINE AND HAVE VISION CREATE INNOVATE INVENT “WORLDTHINK” – GLOBAL VIEW ACQUIRE KNOWLEDGE PLAN AND PRACTICE NETWORK! INSPIRE OTHERS TRUST AND RESPECT ENJOY!

Slide 112 In of Excellence ! In Pursuit 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

Slide 113 Write on my Blog – if you want to say more about A World Without Borders…. ……and for more information……