Doing business in China

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Business environments vary widely between different areas in China. Seasoned corporations and younger Finnish companies operating in China both emphasize the importance of understanding regional nuances. 

When China began to open its economy in the 1970s, much of the rest of the world had an image of a nation where people spoke one official language and had a largely homogenous way of thinking. This was a major misconception. In addition to the standard language, Mandarin, there are still more than 100 languages spoken in the country.
 
According to professor Matti Nojonen who is conducting post-doctoral research at Helsinki’s Aalto University, China’s cultural intricacies are most visible in large urban hubs. 
 
“If you ask people in different provinces what the Chinese are like, the answers are similar. But if you ask them what people are like in Beijing or Shanghai, the cultural differences emerge.”
 
Finnish companies who have succeeded in China have understood that a business operation must be built separately in each area and for each target group. The Finnish Metso conglomerate, which started supplying machinery to China as far back as 80 years ago, is one example of a large technology company that has successfully taken this approach.
 
“The diversity between the provinces, in terms of both culture and approach to business, is both a richness and a challenge,” says Jukka Seppälä, vice president of stakeholder relations and trade policy at Metso. The company set up its first joint-venture company in China in 1989, and today has a local network of manufacturing, sales and service units. 

Eco-investments

Finnish companies are particularly drawn to China as a result of business generated by urbanisation and the increasing demand for environmental technologies. Metso also focuses on these megatrends.
 
“There are huge amounts of infrastructure being built in China, which creates demand for Metso’s rock crushers and wear parts,” says Seppälä. The company also provides process automation systems for the pulp, paper, chemical, energy and oil and gas industries. 
 
Amidst rapid growth, China’s main environmental challenges are water scarcity and pollution, as well as air quality in urban areas. However, not all provinces place equal priority on solving environmental problems.
 
Finnish minerals and metals technology company Outotec has reassured its Chinese clients of the profitability of environmental investments. About 70 per cent of China’s copper smelting plants use Outotec’s technology, which enables them to achieve much smaller emissions than competing technologies.
 
“Our business drivers in China can be summed up with three terms: environment, resource efficiency and energy saving,” says Kimmo Kontola, Outotec’s executive VP and president of the Asia-Pacific region.
 
“We make an effort to understand local demands and business culture, and aim to have as large a local share as possible in our deliveries,” Kontola says. Outotec received its first orders from China more than 30 years ago, and focuses on long-term client relationships as well as relationships with official bodies. 
 
Political relations between countries play an important role. Finland was among the first Western countries to recognise the Republic of China, and the trade agreement between China and Finland was signed in 1953. 
 
“The goodwill we earned back then still remains,” says Metso’s Seppälä, adding that in the mid-1950s, both Finland and China were recovering from tough times. 

Cleantech in demand

Finnish GreenStream Network, which focuses on carbon asset management, renewable energy services and projects pertaining to energy-efficiency in China, cooperates closely with Chinese officials. CEO Jussi Nykänen says that China presents good opportunities for sustainable growth, and that officials have set up a functioning system for the approval of emission-reduction projects. 
 
“Our business in China took off quickly when we found a local company with a strong network. We created a joint venture in Hong Kong and a subsidiary in mainland China,” Nykänen says. 
 
“We’re developing, funding and implementing energy-efficiency projects based on Nordic technologies in China. One example is the Henglian Shandong Guanghua project, in which we are replacing a paper factory’s old vacuum pumps with Finnish Runtech Systems turbo pumps.” 
 
Helsinki’s Tengbom Eriksson Architects are also responding to the megatrends of urbanisation and sustainable development. In 2009 the firm was invited to take part in the international Tianjin Sino-Singapore Eco-City architectural competition. This autumn the company signed a cooperative agreement with China’s largest landscape design company, Beijing Orient Landscape. 
 
“An ecological starting point in design differs from the present Chinese urban planning which has largely copied the American urban sprawl-type block structure; the different functions are so far from each other that you need a car to travel between them,” founder Patrick Eriksson says. “By considering the location and mutual relationships between various functions, we can decrease traffic and energy consumption.”
 
In less than five years, the Tengbom Eriksson Architects have managed to acquire projects in the Beijing area, Tianjin, Shanghai region as well as in Kunming in southern China.
 
“So far the east coast has developed the fastest, but the resulting economic growth and development will also show up inland and in western China. This country has immense opportunities for cleantech companies,” says Eriksson.
 
Text by Jorma Leppänen
Photo by iStock
 
A longer version of this article was published in Finnair´s Blue Wings magazine (December 2013).

Published December 18, 2013

Category: Local features

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