Purpose :

2. Purpose : • Glass industry development has followed all other industrial activities developments in China. • Flat glass. • Hollowware. • Tableware, giftware. • China has always got an anchored craftsmen tradition in glass and crystal. • Food service is drawing Art of Table industry. • As an international major group in this business, Arc-International has decided to invest in this growing market. "China One" has been its first industrial action.

3. Why a plant in China ? (1) • Our position in Asia before 1998 : • Rep. offices in Japan, China, Hong-Kong, Singapore… • Be able to serve the local and surrounding markets. • Manufacture near the consumer • Some internal markets already well developed are dragging collaterally: • Food service, housing property are dragging housing and art of table markets. • Be able to support sales development with locally produced volumes. • Local production costs. • Be competitive on those local markets. • Be able to promote our quality standard.

4. Partnership ? • When our project started, it was very difficult to work without any local partner ( Nowadays it is legally conceivable.) • Different potential partners : • Financial. • Inside our field of activity. • Administration (local, province…). • J.V. with another foreign company. It depends on the project, but what is shared (capital, assets, knowledge, brands, market, representatives, management, objectives….) has to be clearly defined.

5. Where ?

6. Nanjing • A local industrial glassware manufacturing partner. • A promising development of infrastructures : • New, modern and well located Industrial zones. • Important node on transport and energy networks. • Industrial and technological level. • University and training well established in different skills. • A "proactive" welcome of local administrations. • Seems to be at that time the optimum socio-economic and geographic "center" between the great towns of the East coast and the under equipped "Far West"

7. The A.G.N. J.V. • The administrative "run". • Letter of intention. • Feasibility study. • National, provincial or local ratification : • Level of investment. • Type of activity : encourage, controlled… • J.V. Contract and other linked contracts. • Business license. => Official existence of the J.V. as a company.

8. Setting and running the first facility • Rent on a development zone of existing buildings • Installation of "cold end" processes : • Packaging, • Decoration, sand blasting… Objective : Learn how to run a production business in China : - Chinese industrial culture knowledge, hiring manpower, training… - Purchasing, transports, logistics. - Distribution networks, customers organization and practices. - Circuit of money (investments, customers, providers…), banks. - Learn how to work with a partner inside a J.V. - Learn about administrations (national, provincial, local…).

9. China One – Decision / Objectives • Mid 2001 decision to launch "China 1" project • A modern glass factory with an industrial furnace. • Be able to produce for the Chinese and Asian markets glass item down Arc International brands within our quality standard. • Facility to be operating beginning 2003. • Maximize contribution of local providers in the project. • Rely a maximum on the existing A.G.N. local team. • Engineer an evolutionary and modular project.

10. China One – Land choice and purchasing • Inside or outside an industrial zone ? • Functions of the industrial zones. • Principle of land acquisition in China. • Right usage for a certain period. • Land availability and cost evolution. • Our decision : • Inside NETDZ one of the most recent zones in Nanjing. • On a new lot development. • Non leveled (leveling started January 2002).

11. CH1 – Land preparation - NETDZ

12. CH1 – Project engineering • Specification for the plant done by AI engineering and future users. • A.P.S. Advanced Specification to launch biddings. • P.R.D. Detailed Specification ; basis of the contracts. • This final organization took several months to be set up and work efficiently with AI engineers.

13. CH1 – Understanding engineering way to do • Understanding Engineering Chinese organization and targets in such a project : • Specific structure gathered around a project leader made of numerous teams (civil work, electrics, piping..?). • More motivated at the beginning to capture know how than to enter inside the project itself. • Used to work with heavy standards (GB) and promote their solution as a standard. • After 3 months we got a much better level of mutual trust and work became very productive.

14. CH1 – Environmental impact study • Very complete environmental impact file : • Urbanistic aspect, traffic and people migrations. • Air pollution. • Water pollution. • Noise • Security and safety • To be on an Industrial zone make more easy. • Involvement of the Nanjing Environmental Science research Institute.

15. Selection of providers and sub-contractors • Selection of providers : • Non process equipments (compressors, batch system, power generators…). • Specific building parts (roofing and siding…). • Process equipments out of A.I. delivery (lehrs, handling lines and machines, shelves system in warehouses, forklifts…). • Selection of subcontractors : • List and references is part of the answer to bidding. • No access to their contracts. • Difficult to manage second level of contractors.

16. CH1 – Furnace Engineering and construction • Original engineering from AI : • Scope: furnace, civil work and networks linked to furnace. • Drawings provided by our own furnace engineering. • Drawing converted in Chinese standard by BCEL : • Standard conversion. • Detailed drawings (networks, metallic structure…). • Purchasing in and out of China : • Maximized Chinese refractory (AGN prospecting). • Some imported from France and machined in China. • Assembly by a Chinese specialist (Baosteel).

17. Construction great steps • Leveling, preparing the land and roads : • January to May 2002. • Soil treatment and basement construction : • May to August 2002 (Picture 1). • Building erection : • July to January 2003 (Picture 2). • Installing the process and furnace : • November to March 2003 (Picture 3) • Setting and trying the networks : • January to end of march 2003. • Furnace pre-heating : • March 15 2003.

18. CH1 – Trials and reliability process • Process equipments : • Mainly imported from A.I. • Installed by local contractors supervised by A.I. specialists. • Networks mounted by Chinese companies: => Need for a formal and detailed trial period : • Match between networks and equipments. • Debug engineering and mounting defects. • Train and get the teams to reach a satisfactory level of performance. • Get trained to the emergency procedures.

19. CH1 – Manpower and H.R. aspect (1) • Despite the existence of glass factories, no really skilled people available in the area. • Main key employees were hired at the very beginning 3 to 4 years ago. • Most of the primary production manpower has been hired 4 to 6 months before the production start up. • Production people has participated to the installation of the process and the trial and reliability period. • The factory started to produce with more than 600 persons => need for social structures (logging, buses, canteen, lockers, medical care…).

20. CH1 – Manpower and H.R. aspect (2) • Basic salaries lower than in Europe (~1/10) • High percentage of charges : • Social legal taxes. • High rate of company benefits. • Transmission from SOE's to private companies (Chinese or Foreign capital). • Turn over could become a serious problem : • High rate of "modern companies" development. • Chinese executives may "negotiate" their "international" skills. • Round the clock factories are less attractive.

21. CH1 – Start up production • Production started on April 7 2003 : • First day 2 lines out of 8. • First week 6 lines out of 8. • First week able to package some items under the AI brands (Arcoroc, Luminarc), quality standards where ratified by A.I. Quality management.

22. CH1 – Production and yields ramp up • First 6 months : • Despite interruption during 2 months of heavy technical assistance the factory has followed the targeted ramp up plan mainly based on : • Machine operation and failure yield. • Tonnage production. • Quality and management organization involving more and more Chinese people, and diminution of expatriates structure. • Second year : • Production extension • Improvements of yields • Improvement in organization and production costs. • Development of our local collection.

23. CH1 – Picture (1) Soil treatment and foundations

24. CH1 – Picture (2) Buildings erection

25. CH1 – Pictures (3) installing process and furnace

26. Pictures (4) setting and trying process and networks

27. Picture (4) A.G.N. April 2004

28. Lead Crystal main producers in China (1) • MeiYing Glassware (Zhejiang) Co. Ltd • 2 Electric Furnaces : 8 T / 24h + 15 T/ 24h (start at Sept 2005) • 24%PbO Crystal • Hand-made process + semi-automatic process • Vase , Astray, Tumblers, craftworks etc . • Shandong Hua Peng Glassware Co. Ltd • 1 Heavy oil Furnace : 3 T/ 24h • No PbO Crystal • Automatic blowing process • VAP (main products ), Tumblers • Guangdong JiaRong Glassware Co. Ltd • 1 heavy oil furnace : 50 T/ 24h + 1 pot furnace : 2 T / 24h • No PbO Crystal • 2 Automatic Line + 1 Semi-automatic Line • Perfume Bottles , Wine Bottles

29. Lead Crystal main producers in China (2) • DaLian ShengDao Glassware Co. Ltd • 1 Electrical Furnace : 10 T/ 24h • 24%PbO Crystal • Hand-made process + Semi-automatic Line • VAP ,Vase, Astray , Tumbler, Craftworks • ChangChun AoPu Optical-Electrical Co. Ltd • 1 Electrical Furnace : 10 T/24h • K9 • Domestic Market • Chongqing BeiBei Glass Factory • Pot Furnaces • Colored Glass (Soda Lime) • Hand-made process • VAP, Vases, Tumblers, Craftworks