Agfa in China A mutually beneficial Partnership

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Agfa in ChinaA mutually beneficial Partnership
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• Agfa started 1985 cooperation with a Chinese
  partner Wuxi Aermei Film a Chemicals
  Corporation.
• Activities finishing and packaging of Medical
  X-ray film, Colour Paper and Colour Film.
• Agfas relationship with Armei progressed over
  the years to become a mutually beneficial
  arrangement, which included the full endorsement
  of the Chinese authorities.

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• In 1989 Agfa started with the expansion of
  Aermeis manufacturing capabilities.
• The good relationship between Aermei and Agfa has
  lead to the establishment of a Joint-Venture
  Agfa Wuxi Film Production Co Ltd from which the
  agreement is signed in 1995.
• The participation ratio in the Joint-Venture was
  initially 76 for Agfa.In 1999 is was increased
  to 99 Agfa.

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• On May 18th 2001, Agfa opened in Shanghai its new
  operations centre of Agfa Wuxi Imaging Ltd in
  Shanghai. This was a second milestone for Agfas
  presence in the PRC, our Shanghai office is the
  operations centre for all our sales, service and
  logistic activities in the PRS. It is the centre
  of a large new sales organisation

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• Agfa is a leading company in prepress. In the
  strong growing Chinese Market we are almost not
  present in prepress.
• The Agfa board approved a project for production
  of printing plates in China in November 2001.
  This plant should be our strategic base for sales
  in the regio Asia Pacific.

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• The goals set by the board were
• 1. to obtain a wholly owned operation status (no
  JV)
• 2. to secure a solid business license within a
  reasonable time frame (i.e. less than 6 months).
• 3. to start construction of the new plant asap
  and to be operational end 2003.
• 4. to obtain duty exemption for imported
  production equipment.

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• Dec.5th - 2001 start with set up of a wholly
  foreign owned enterprise (WFOE) in
  cooperation with an international consulting
  company in Shanghai.
• Name of the new company Agfa (Wuxi) Printing
  Plate Co Ltd.
• Scope of the business production of PS plates
  (analogue plates) digital printing plates and
  other printing plates, sales of self-produced
  products and provision of after-sales services.
• Investment of the new WFOE 29,8 million US
  planned started up Q4 2003.

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• Agfa decides on building the new factory in Wuxi
  
• - we have a long time and excellent
  relationship with the local authorities in
  Wuxi.
• - we have experience in production in Wuxi with a
  good local Agfa staff.
• - the Wuxi new development zone offers
  excellent conditions for new investors.

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• Dec.12/13th - 2001 meeting with the
  representatives of Wuxi National High Tech
  Industrial Development area
• - presentation of the project ? issue
  PS-plates are qualified as restricted B, duty
  free treatment of imported equipment needs
  approval on national level.
• - Wuxi authorities offer support at national
  level memo of understanding signed.
• - all documents project proposal, feasibility
  study and articles of association to be prepared
  by Agfa asap.

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• Jan. 2002 - all documents sent to the Wuxi
  authorities with limited business scope (no
  PS-plates for approval).
• - complete set of documents with extended
  business scope sent to central authorities in
  Beijing (SPDC).
• - intensive contact with Wuxi authorities to get
  approval asap.

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• Certificate of approval and business license
  February 7th 2002
• (limited business scope)
• Approval of the extended project proposal by SDPC
  February 18th 2002.
• Approval of the feasibility study by the Jiangsu
  Development Planning Committee March 8th
  2002.
• Approval of articles of association March 12th
  2002.
• Certificate of approval on the extended business
  scope March 13th 2002.
• Business license (extended business scope)
  March 15th 2002.
• Approval of duty free (customs duty and VAT)
  importation of equipment by the Jiangsu Customs
  Office March 18th 2002.
• Confirmation letter on encouraged foreign
  investment project by the state (issued by the
  Jiangsu Development Planning Committee) March
  19th 2002.

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• Meeting with the representatives of Wuxi High
  Tech Industrial Development Area March 11th-15th.
• Goal of the meeting to solve all open issues to
  get all approvals.
• Contract of Granting State Owned Land Use Right
  signed on March 14th.
• Ground breaking ceremony date fixed April 12th
  authorities insist that an approved draft of an
  environmental assessment report should be ready
  by April 8th.

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• Environmental Assessment Report
• we contacted several Design institutes and signed
  a contract with the Wuxi Environment Science
  Research Institute.
• They work very professional and we got an
  approval on the draft of the environmental
  assessment report by the environmental protection
  bureau of the Jiangsu province on April 8th.
• We expect approval of the final report by the end
  of May.

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• Preliminary Design Report
• After consulting different engineering companies,
  we signed an agreement with a large Chinese
  engineering contractor for preparing the
  preliminary design report and making a detailed
  engineering lay out that fits with local
  regulations.
• On April 29th the preliminary design report who
  presented to all the local Wuxi authorities
  involved and approved.

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• Tendering for the building is ongoing now.
• We hope to start with the building this month.

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• Summary
• - we could handle all the approval procedures
  rather fast.
• - we obtained a full business within 3 months
  after application.
• - we signed the contract for the land and got the
  land use design permit.
• - preliminary design is approved.
• - civil works start this month, project on track.

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• What did we learn
• - everything is possible, nothing is easy.
• - intensive cooperation and good relationship
  with local authorities mandatory to be succesful.
• - regulations and laws are complex,assistance of
  an experienced consultant very helpful.
• - Chinese engineering companies do an excellent
  job provided good coaching is given.