Center for Markets in Transition (CEMAT)

CEMAT organized a high-level Nordic-Chinese business symposium in Shanghai

26.05.2011

CEMAT organized a business symposium ‘Boosting Nordic-Chinese Businesses’ on May 12, 2011 at the Fudan University Nordic Centre, Shanghai. The event gathered a large audience and it was held in the form of a panel discussion, with invited panelists representing the top leadership of Nordic companies and the Nordic Chambers of Commerce in China. The discussion started with Prof. Riitta Kosonen’s brief overview of the topics to be discussed, reflecting CEMAT’s various studies on Finnish firms in China and based on its databank of around 150 interviews with the firms. She invited the panelists to converse the various challenges of Nordic companies in China, such as location decisions, government relations, IPR problems, labour issues, effects of the financial crisis, and the competitiveness of Chinese companies investing abroad. The moderator of the discussion, Mr. Jaani Heinonen, Director of FinNode China, then took the floor and opened the panel for discussion by presenting one of the topics to each panelist.

Riitta Kosonen and panelists
Riitta Kosonen and panelists

As to China’s changing role in company strategies, Mr. Christian Overgaard, Regional Vice President of Chr. Hansen A/S, and the Chairman of the Danish Chamber of Commerce China, reflected on challenges faced in China by stating that China is an infinite opportunity yet with challenges in the implementation. Currently, companies are putting their global R & D operations in China, and if China’s growth continues as today, the future trend will be to locate their global headquarters in China, too. However, the Chinese state is tightening its strategy towards foreign companies that feel the increasing protectionism, and Mr. Jonas Alsen, the Managing Director of Sonepar, Elektroskandia and Director of the Swedish Chamber of Commerce China, Shanghai Chapter, commented that the clever strategy of the Chinese state was to open up to foreign investment but to lock all foreign companies in joint-ventures with local ones, and/or tightly control the market. Now the Chinese industries are stepping upwards in the technology ladder, developing very fast in new fields such as green tech.

This is also related to some of the main challenges faced by Nordic companies in China, such as the problems of copying. As to Intellectual Property Right violations, Mr. Geir Sviggum, Managing Partner at Wikborg, Rein & Co., and Chairman of the Norwegian Business Association in Shanghai, provided the audience with two stories. He highlighted through examples how Western companies will pay a lot if they do not register trademarks,logos and domains in China. In addition, being a large country, China still has considerable regional differences when it comes to the implementation of law: the court system is totally different in a small village from what it is in Shanghai.

Symposium audience
Symposium audience

The other major challenge for Nordic companies in China is human resource management, especially the increasing cost and high turnover of employees. Mr. Tero Kosonen, the Managing Director of MPS China and the Chairman of the Finnish Business Council Shanghai, reflected the labour market situation in China and noted that the Chinese job market is like the Shanghai summer, “sizzling hot”. The main question in HRM in current China is how to attract and retain talent, since Chinese employees can find smart career possibilities not only in foreign companies, but also in local ones. There are dynamic companies, such as China Mobile or Huawei that are internationalizing - but at the same time close to the traditional Chinese culture - that are able to provide lucrative job opportunities for talented Chinese. This is also related to the current rapid growth that shows how fast China has been able to recover from the recent global financial crisis. This was commented by Mr. Árni Alvar Arason, the President of Ossur Asia and Chairman of the Icelandic Business Forum in China who remarked that the crisis cleaned the table and removed many speculators from the market, but at the same time, postponed some healthy startups. The crisis only lasted some 3-6 months in China, and along with the current growth, HR questions are heating up since Chinese employees are “restless”, and are responding to high inflation by putting upward pressure on wages.

Jaani Heinonen and Riitta Kosonen
Jaani Heinonen and Riitta Kosonen

To end with, Prof. Riitta Kosonen presented some recent findings on the ever increasing outward foreign direct investment of Chinese companies, and noted that the Chinese are already the 5th biggest investor on a global scale while at the same time the Nordic countries are getting only a fraction of these investments. The Chinese are interested in vast resources and market potential, which puts a challenge to Finland and other Nordic countries; yet, as Mr. Sviggum noted, there is a lot of potential in Chinese-Norwegian business in the energy sector, in particular.

The discussion continued with some questions and comments from the floor, such as in the future, will the companies acquired by the Chinese be also managed by the Chinese? The panel seemed to agree that while nowadays large Chinese companies and the academia, for example, are buying talent from the West, also Western companies are putting Chinese employees in key management positions - a trend that is likely to continue and strengthen. The lively discussion on the business prospects of China, as well as active networking, were continued with some cocktails and finger food served at the Terrace of the Nordic Centre, showing that a follow-up gathering on Nordic-Chinese businesses will be timely again in the near future.

 

Symposium announcement (pdf)

 

More information: Director, Prof. Riitta Kosonen riitta.kosonen [at] aalto [dot] fi and Research Manager Erja Kettunen-Matilainen, erja.kettunen-matilainen [at] aalto [dot] fi

 

More photos of the panelists:

Christian Overgaard and Tero Kosonen

Christian Overgaard        and Tero Kosonen

Shanghai_muokattu_07_nettiin.jpg Jonas Alsen and Geir Sviggum
Tero Kosonen and Jonas Alsen Tero Kosonen and Jonas Alsen
Árni Alvar Arason and Christian Overgaard Árni Alvar Arason and Christian Overgaard
Symposium audience Symposium audience

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