A brief introduction to responsible economy in China. This presentation was delivered at CCIFC Beijing on January 14, 2014

1. January 2015CCIFC Beijing
Encouraging an Innovative and Impactful
Responsible Economy in China
Photo : ESA

2. Summary
Disclaimer : this presentation was created for the exclusive use of our client who is entitled to use it for its own internal needs and
further discuss with Maverlinn officers. This presentation must not be shared with third parties without the written prior consent of
Maverlinn. This presentation is not fully understandable, complete and reliable without further analyses and oral explanations.
Page 2
1.
2.
3.
4.
5.
The 12th FYP has opened a new window for qualitative growth
Innovation must target and address and curb “development liabilities”
More attention is needed to the “extended” economic space
Corporate leaders are willing to lead impactful and targeted initiatives
GDP growth alone is not good enough to assess economic quality

3. Presentation
• What is at stake in redefining economy goals ?
• Thinking out of the box for better results: the next steps
Page 3

4. The China 12th Five-Year Plan has set new priorities for
China growth and development
Page 4
Comments :
• Approved by PNC on March 2011, more
qualitative growth for China, and possibly
slower GDP growth
• But much more focused on externalities
and creating a sustainable environment
• The shift from market consumption
economy to more qualitative economy
takes time to bear fruits
• It requires significant investments,
persistence and trust between economic
agents

5. Economists focused on growth, and specifically wealth
accumulation, before starting transitioning to other criteria
Page 5
Comments :
• Redefining shared capital is key:
− Shared trustable environment
− Shared business values
• Global impact
− Velocity of knowledge and
liabilities diffusion worldwide
− How to define good growth and
navigate through the “dirty”
growth trap ?
− How can the real growth impact
be better captured by 360°
economic indicators ?
18th century
(mercantilism)
20th century
(positivism)
Smith Economic
framework
Moral framework
Growth
19th century
(classical)
Ricardo
Marx
Virtues
Mill
Smith
First industrial revolution
21th century
(quantitative)
A
grarian
Industrial
Post
Industrial
Responsibility

6. Economy initially a moral science gradually shifted approach
to focus on quantitative approach and simple aggregates
Page 6
Comments :
• The growth of the “Classic” economic
space is measured by GDP growth
• GDP is an aggregate measure of
production equal to the sum of the
gross values added of all resident
institutional units engaged in
production1
• The “360° extended” economic space
integrates all factors related to
development, including those usually
unaccounted for by GDP
• The non visible face of growth creates
long term liabilities or benefits e.g.
environmental, ethical and societal
«Classic»
Economic space
«360° extended»
Economic space
1 Source: OECD
Impact ?

7. The economic vision of managing Assets - Liabilities (ALM)
has been over-simplified to a GDP / Public Debt approach
Page 7
Comments :
• GDP measures only production flows,
and sometimes misses important ones
(e.g. unreported fin. transactions)
• GDP flows can be used to approximate
part of national asset value but residual
unaccounted for assets must be added
• Liabilities could be calculated based on
remedy cost to damages caused by
human activity to “life” supporting assets
• Direct impact on environment quality:
national accounting systems still have
difficulty to capture it, as it stands as
potential liability and not national debt
« Assets » « Liabilities »
China Inc.
N N W 1
1 « Net National Wealth »

8. This result is a large « gap » that needs to be funded as
unaccounted for liabilities related to growth are surfacing
Page 8
Comments :
• CEOs of industry leaders realize the
importance for their firms to establish
a strong footprint beyond the classic
economic
• One of their priority is to better position
the corporate brand in the extended
economy
• Prudence is to “sacrifice current
pleasure for future pleasure” is not
encouraged by GDP only indicators
• Direct impact on environment quality
but national accounting systems still
have difficulty to capture it
Quant power:
- GDP growth
- GDP per capita
- Total national debt
Soft power – externalities :
culture, environment,
justice, excellence

9. Presentation
• What is at stake in redefining economy goals ?
• Thinking out of the box for better results: the next steps
Page 9

10. To start with, we may all wonder what is really at stake …
Page 10
“Chinese people used to feel a sense of pride
for being the world’s factory. Now, everyone
realizes what it costs to be that factory. Our
water has become undrinkable, our food
inedible, our milk poisonous, and worst of all,
the air in our cities is so polluted that we
often cannot see the sun.”
Jack Ma
Harvard Business Review
November 2013
We have no replacement planet …
“China’s reform has entered a deep water
zone, where problems crying to be
resolved are all difficult ones. What we need
is the courage to move the reform forward. To
use a Chinese saying, we must “get ready to
go into the mountain, being fully aware that
there may be tigers to encounter.”
Xi Jinping
College of Europe
Bruges, April 1 2014
Photo : NASA

11. Page 11
EthicsEfficiency
21st
century corporate
economics
1. Brand recognition
• Quality, excellence
• Real claim, honesty
2. International legitimity
• Ethics
• Responsibility
• Dilemna between flows and ALM
3. Innovation
• Sustainability
• Social mission
Psychology
Trust
(Smith, Akerlof, Marshall)
“An economist should not only be interested by pure economics, there is no
greater danger ” [ Maurice Allais, Nobel 1988 ]
Trust must be the currency of the 21st century as it represents
ultimately the cornerstone of human economic activity

12. Page 12
Corporate
leaders
NGOs
Government
Impact on
“extended“
economy
Corporate leaders
• Wish to position themselves as long
term leaders in extended economy
– Brand value creation
– Sustainable reference position
NGOs
• Sector in infancy in China despite
numerous institutions, may undergo
major reform to deliver better and
much needed results
GDP economics provides too limited insights
Government
• Provides initial direction and guidance,
set long term objectives such as
those appearing in 12 FYP
1
23
1
2
3
Corporate leaders realize that they have a duty to contribute
beyond the « classic » economy model which is aging

13. Page 13
Comments :
• Based on a 3 year research programme
led by Maverlinn and its team and
authored by Pr. Benoit Vermander. It was
first published in English, then in Chinese
• It was supported by industry leaders who
not only provided support but also key
insights for the research
• Aside explaining what can be CSR in a
Chinese context, the research focuses on
identifying key soft operational success
factors for the development of the China
economy
• The research initially set for an
international audience also received a
warm welcome from Chinese firms
Our CSR in China initiative is an example of what can be
done to raise awareness on responsibility

14. Another example includes the Netspring Green IT
classroom programme
Page 15
Again industry leaders are supporting green recycling and
education projects in less favored areas …
Reasonable investment … ambitious goals
• Kill two birds with one stone : PC recycling
+ IT education in less favored areas
• Work closely with local governments
• Create impact and associate volunteers
• Go beyond class rooms with green power
programmes such as MAV-GEPS (video)
So far, Netspring has managed to support over 25,000 kids mainly in rural areas

15. Page 16
• MNCs sponsored programs to fund cleantech and curb environmental liabilities
• Enhanced world citizenship footprint through innovation and responsibility
Future projects shall not be shy to address sustainability
issues and solve complex unbalanced economics

16. Concluding words
Page 17
Moving forward to create both impact
and goodwill over the long term
• Large scale negative side-products of current
growth jeopardize future growth and threaten the
sustainability of our ecosystem
• Political leaders are putting more emphasize on
this aspect to mitigate and solve complex issues
impacting the extended economy
• The next steps will be based on a series of
targeted actions to find solutions to issues
impossible to solve under « classic » economics
e.g. reducing certain pollutions
• Increasingly real industry leaders will support
impactful and innovative programmes

17. Olivier Coispeau
Maverlinn, Founding Partner
Leading a world of change, together