Dave Murphy of PM Group gave his speech at Cork China Business Summit in Cork, 13 July as part of Asia Business Week Ireland 2015

1. 13 July 2015
City Hall, Cork
Succeeding in China: Insights from
a World Class Irish Company
Dave Murphy
Chief Executive Officer, PM Group

2. The project delivery specialists
PM Group
Setting Up a Business in China
focus.
The project delivery specialists

3. Key facts…
3

4. Worldwide Office Network
4
International
Office Network
Belgium
China
Czech Republic
India
Ireland
Poland
Russia
Saudi Arabia
Singapore
Slovakia
Turkey
United Kingdom
United States

5. The project delivery specialists
PM Group
China Overview
The project delivery specialists

6. A Full Services Company
Program & Project
Management
Concept & Basic
Design
Detail
Design
Permitting
Procure &
Contract
C & Q and
Handover
Construction
Management
Outsource
Technical
Services
“Life Cycle”
Approach

7. China Clients Include…

8. China: Office Details
PM Group
Unit 1505, Block A
SOHO Zhongshan Plaza
No.1055 West Zhongshan Rd.
Shanghai 200051, China
上海中山西路1055号
SOHO中山广场A座1505室
Country General
Manager
Niall O’Loughlin

9. Country Trends
• Population is increasing at a slow rate. Large
cities now have a negative growth rate
• Life expectancy is getting higher and population
is getting older
• Government still maintain a firm authority on
industry growth
• GDP growth is slowing and becoming more
stable
• Laws are changing to encourage more
manufacturing within China
• Intellectual Property laws are getting stricter
• Universities in China are growing in world
rankings, more and more educated workforce in
China
• Democracy pressures from Hong Kong and
Taiwan
• Government crackdown on corruption has
slowed down the construction industry
9
Year Population
(M)
Population
Growth %
% GDP
Growth
%
Inflation
Rate
2010 1340.9 0.5 10.4 3.3
2011 1347.4 0.5 9.3 5.4
2012 1353.9 0.5 7.7 2.7
2013 1360.3 0.5 7.7 2.6
2015f 1401.5 0.5 6.7 1.5
2016f 1408.5 0.5 6.9 N/A

10. The project delivery specialists
PM Group
Expansion into China
growth.
The project delivery specialists

11. Singapore
Bangalore
Shanghai
Chennai
Hyderabad Manila
Ahmedabad
Changshu
Guangzhou
Mumbai
Hangzhou
Gujurat
Bhubaneshwar
Pune
Goa
Thiruvananthapuram
Coimbatore
New Delhi
Suzhou
Beijing
Uzbekistan
Azerbaijan
Georgia
Hanoi
Indonesia
Japan
Kuala Lumpur
Afghanistan Li’an
PM Group in Asia
Office:
Project Location:
Vientiane
Shenzhou
Xi’an
Munger
Indore
Chandigarh
Ho Chi Mihn City
11
Dhaka
Mandalay
Nantong
Wuxi
• ADB

12. Setting Up PM Group’s Business in China 2008-2010
We allowed
6 months at
least
Identify
premises and
enter
appropriate
lease
Register
company
name with
Ministry for
Industry &
Commerce
Register
WOFE
Capital
requirements
Business
License
Design
License
Enterprise
Registration
Tax
Registration
SAFE
Registration
12

13. Establishing a WOFE
• Engage local professional advice
• Develop a realistic business plan for WFOE licence submission
• Ensure all your registrations are applied for in the correct sequence
• Three months to submit all registrations – or start again!
• Comply fully with the terms of your registration
• Accept that China is more bureaucratic than Ireland – be patient
• Get it right first time – do your homework in advance
• Pay your Taxes!
13

14. Where to locate your office?
• Important for Registration!Which city?
• Shanghai – Puxi or Pudong?
• Satellite cities with SEZ – Suzhou?
Which area in larger
cities?
• PM  Architecture & Engineering
Design Services
Ensure correct
designated zoning for
your business!
Enter appropriate lease
Must have lease before
commencing
registrations for WOFE
14

15. Company Name
• Carrefour = “the family has happiness and luck
here”
• Mercedes-Benz = “run fast”
• PM 飘马 = “flying horse”
Chinese is an
ideographic language
• RMB 50M Registered Share Capital“China” in name
• PM Architectural Engineering Consulting
(Shanghai) Co. Ltd.
The ideal is: Trade
Name + China +
Industry + City + Co
Ltd
15

16. Legal & Contracts
Civil law based on statutes not
common law
No systematic notification of new
law
Enforcement of IP breaches
Different region – different
interpretation
Dispute resolution – arbitration =
uncertainty
Need very good in-country legal
advice!
16

17. Finance & Tax
Capital Structure – equity v loan = 70:30
Total investment formally estimated at close to €2 million in business plan
20% paid up front
Withholding tax for outward payments
Taxation interpretation can vary with districy
Cash accounting – not accrual
Books must be kept in local language as well as in English
Renminbi not a traded currency
17

18. Key Success Factors
18
• Having a business model that matches our clients’ needs
• Investing properly in the business from the outset, giving our new
venture the necessary momentum
• Having the right management team on the ground in China
• Achieving early wins with our MNC clients in Q1 and Q2 2011
• Developing a good working relationship with alliance partners
• Knowing our weaknesses – don’t overstretch and deliver on our
commitments to clients

19. The project delivery specialists
Project Experience
China
committed.
The project delivery specialists

20. AstraZeneca, China
High Containment OSD Facility, Taizhou
Project
Type:
Secondary Pharma
Value: Confidential
Completed: In progress
Area: 6,000 sq. m
Services: E, P, CQ
• Redevelopment of an existing
Sterile Fill Finish facility to an
OSD facility
• Phased development
commencing with 500 million
tablets per year and increasing
to 1 billion after the first year
• Scope includes Concept, Basic
& Detailed engineering design,
Process Procurement and CQ
for Phase III

21. Johnson & Johnson, China
Liquid Medicines Facility, Shanghai
21
Project
Type:
Secondary Pharma
Value: US $50 million
Completed: In progress
Area: 9,200 sq. m
Services: E, PM & Technical Support of PCMCQ
• Formulation and Filling of
liquid OTC medicines
• Includes raw materials
handling, liquid pre-mix &
mixing processes, and 5
filling & packaging lines
• Meets J&J SDPs, China
CFDA GMP v 2010 and
Australian TGA compliance

22. CP Guojian Pharmaceutical (CPGJ), China
Biopharmaceutical mAb Facility, Pudong
22
Project
Type:
Biological
Value: US $110 million
Completed: In progress
Area: 10,000 sq. m
Services: Engineering Design & CMCQ Support
• Large-scale GMP mAbs
manufacturing facility
• 6 x 5,000L cell culture capacity
• Provided CD, process
procurement and CM support

23. Abbott Nutrition, China
Greenfield Infant Formula Facility, Jiaxing
23
Project Type: Nutritional
Value: US $150 million
Completed: 2014
Area: 32,000 sq. m
Services: Engineering Design & CM Support
• Provided Concept, Basic &
Detailed Design and onsite
CM support
• Includes Wet Mixing,
Evaporator, Spray Dryer (4
t/hr.), Dry Blending,
Packaging
• Production, CUB,
Warehouse, Office Labs
and WWTP areas

24. Wrigley, China
Greenfield Confectionery Facility, Guangzhou
Project Type: Confectionery
Value: US $173 million
Completed: 2011 & 2013
Area: 46,000 sq. m
Services: MP, E, P & Sustainability Review
• 2011 - Greenfield
Campus with a CUB,
Admin and Production
facility designed to
expand in 3 phases

25. Givaudan, China
Greenfield Flavours Plant, Nantong
Project
Type:
Commodities
Value: US $50 million
Completed: 2015
Area: 12,000 sq. m
Services: EPCM
• Includes 3 x Spray
Dryers and 2 x
Powder Blenders
• Currently in Startup
Phase

26. Mondelez, China
Brownfield Biscuit Factory Expansion, Suzhou
Project Type: Confectionery
Value: US $95 million
Completed: 2015
Area: 36,000 sq. m
Services: MP, EPCM, LEED
• 450m Linear Production
Line in a Brownfield Biscuit
Manufacturing facility
• PM Group provided full
EPCM services for this
project

27. The project delivery specialists
Ease of Doing Business & Transparency….
trust.
The project delivery specialists

28. China’s Ranking 2009 - 2014
28
IMPROVING
DISIMPROVING

29. Construction Safety – a BIG issue!!!!
29

30. The project delivery specialists
Personal Reflections
detail.
The project delivery specialists

31. Personal reflections on going International…….
‘Gravitational
pull’ of the
home market
Need a huge
‘escape
velocity’ to
overcome it!
Deep market
research
Intensive
travel
Can deliver a
remote
business
service
Technical
know HOW
and WHO
Must have
Champion in
the field and a
Sponsor in
HQ
Patience - it
will take
longer than
you think!
And cost
more than
you think!
31

32. 32
Thank You
Dave Murphy
CEO
T: +353 86 8507252
dave.murphy@pmgroup-global.com
www.pmgroup-global.com