I wonder if you are aware that the trade between Switzerland and China accounts for 4% of the annual Swiss GDP. And did you know that the Chinese manufacturing labor costs (2014) were higher than those in Romania? Chinese labor costs rose by an annual average of 17% in 12 years. The old rule of thumb that China is [only] a manufacturer and [only] sells in Europe is not true anymore.
China is an economy that increasingly focuses on services and that is one reason why many Chinese companies are suddenly investing in Europe. There are, however, obstacles for Chinese companies when they are trying to enter other overseas markets. They often need to overcome hurdles such as claims of ideological incompatibility, concerns that they are threats to national security and suggestions of unfair competition.
All these questions formed the background for the CEIBS 2nd Europe Forum on May 20 in Zurich (which was the second of four stops: Munich, Zurich, London and Paris). From early in the morning, some 240 people gathered at UBS’s renowned conference center building located a stone’s throw away from the legendary “Paradeplatz,” the heart of Switzerland’s financial center.
The morning was filled with talks and panel discussions; the afternoon was rounded out with excellent presentations such as the one given by Nicolas Musy. He is the co-founder and President of the Board at Swiss Center Shanghai. He drew on the findings of the Center’s latest survey, which included interesting and surprising insights such as the ones I have mentioned in the first paragraph.
You’ll find a longer summary of the morning sessions on the CEIBS website (including the speeches by H.E. Geng Wenbing, Ambassador Extraordinary and Plenipotentiary, People’s Republic of China to Switzerland, Marie-Gabrielle Ineichen-Fleisch, State Secretary and Director of the State Secretariat for Economic Affairs (SECO) and Prof. Ding Yuan, as well as two panel discussions).
In the morning, Prof. Ding Yuan said that the main motives for Chinese companies to go abroad were to obtain resources and skills that they can then use to perform even better in their home market. In the afternoon, the challenges for foreign companies working in China were the subject of four workshops.
The first was on the challenges of working in private and China’s state-owned enterprises. It was presented by John-James Farquharson, Head of Corporate H.R. at Conzzeta AG, Zurich.
He explained how SASAC, the State-owned Assets Supervision and Administration Commission of the State Council, supervises 117 companies worth 15 trillion USD and highlighted a few specific state-owned enterprise (SOE) characteristics, like the fact that they tend to discuss the numbers and top-down objectives whereas Western companies usually know the numbers and discuss objectives. And the fact that they are caught in the dilemma of being profitable while keeping people employed. If any company starts working with an SOE, they must be able to deal with organization complexity and ambiguity and also be willing to spend time in remote places.
In addition, Angela Qu, Group Vice President for Supply Chain Management, ABB, spoke about supply chain management challenges in the Chinese market, Peter Lennhag, President of Asia Paciﬁc Executive Advisors, unveiled his six winning strategies for companies in China, and Jean-Luc Meier, co-founder of “Strategic Expansion Solutions,” spoke about corporate diplomacy in China.