FINNBIZ / MAY 2007
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FINNBIZ / MAY 2007
CONTENTS FINNBIZ From the Chairman The Chinese economy keeps on growing at a very fast pace and this also goes for Shanghai. Within soon China will experience two mega events i.e. the Beijing Olympics and the Shanghai World Expo which both definitely will boost the economy even further. Measures have already been taken to moderate the growth but China will, in all likelihood, remain an engine of growth also in the coming few years. The past year was very eventful for FBCS members. New plants and facilities owned by Finnish corporations were inaugurated in the Shanghai region showing the confidence for the regional economy. This has also meant that new people have relocated to Shanghai with a need to build personal networks for their businesses. The FBCS wants to be a major facilitator in this process. Corporations operating in China are accustomed to changes in the legal framework and need to have the ability to adjust to new situations. There are major changes taking place concerning a.o. taxation as well as labor law which are important to become familiar with ahead of time. The FBCS will also try to contribute to improve the awareness of such changes. For FBCS the past year has brought many new members. More and more Finnish companies, representing small and medium size enterprises are getting established here, and the service sector is also represented more than before. The activities of the Council should naturally be meaningful for all members and more thought will be given to this when planning the programs for the coming months.
FBCS Board 2007 Finnish Business Council Shanghai held its Annual General Meeting in the end of March and elected a new board for the year 2007. Mr. Bengt Sjöblom, UPM-Kymmene, China & Asia-Pacific,
[email protected] Mr. Matti Niemelä, Finpro Shanghai,
[email protected] Mr. Sampo Antti, Stora Enso Oyj, Shanghai rep. office,
[email protected] Mr. Vesa Kalenius, Handelsbanken, Shanghai,
[email protected] Mr. Risto Kontturi, Kone Elevators Shanghai,
[email protected] Mr. Juha Kuikka, Kemira (Yixing) Co., Ltd.,
[email protected] Mr. Sulo Ranne, Planmeca Medical Equipment (Shanghai) Co. Ltd.,
[email protected] Mr. Jan Skutnabb, Finnair China, Shanghai,
[email protected] Mr. Nalle Stenman, Metso Paper (China) Co.,Ltd, Asia-Pacific,
[email protected]
Vesa Kalenius, Sulo Ranne & Bengt Sjöblom
Matti Niemelä & Risto Kontturi
As chairman of the Council I naturally hope for input from the membership to better plan our activities. Please do not hesitate to contact any of the Board members with your suggestions. I also thank the outgoing board members for their contribution to the FBCS and wish the new ones welcome on board. I also wish to thank our first Finnbiz Editor in Chief , Catarina Stewen for her excellent work in pioneering this publication and wish her successor Milla Aumo all the best in developing Finnbiz further for all FBCS members.
From the Chairman FBCS Board 2007 News in brief Opening ceremonies
Catarina Stewen Editor-in-chief
Bengt Sjöblom
In this issue
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Thank you! Finnbiz was born two years ago when I received the task to create a newsletter for the Finnish Business Council in Shanghai. With this issue, I say Goodbye and thank you to all of you who have supported and helped me in creating this newsletter and making it a success. I have truly enjoyed this time and it is my pleasure to hand over the responsibility to the new Editor-in-chief Milla Aumo, who I trust will make you an even better Finnbiz to enjoy in the future. I am returning to Finland with my family after eight years in Asia and will continue writing stories there.
I wish you all an active year with FBCS
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From left: Sampo Antti, Juha Kuikka, Jan Skutnabb, Nalle Stenman
FECC promotes Finnish know-how Expo update
FBCS coming events
Sulo Ranne and culture shock
28. May FBCS Lunch Check our website www.fbcs.fi for updates on coming events. Information is also sent by e-mail to members.
Brand building at KONE Coordination meeting in Shanghai
The paper for Finnbiz by courtesy of UPM.
Finnbiz is published quarterly by Finnish Business Council Shanghai. If you would like to include your news or advertisement in next issue, please contact Milla Aumo, editor-in-chief, tel. +86 13524253227, e-mail:
[email protected] before 16.August 2007. Become a member of FBC Shanghai, please contact Matti Niemelä, matti.niemela@finpro.fi. FINNBIZ / MAY 2007
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FINNBIZ NEWS
News in brief Dynea and Durante & Vivan form joint venture The Finnish adhesive resin producer Dynea and Italy’s Durante & Vivan, have formed a joint-venture to produce and distribute hot melts in Asian markets, including China. Shanghai based Durante Dynea Adhesive Co. Ltd. opened a manufacturing plant in the Waigaoqiao Free Trade Zone, which lies in the northeast of Pudong New Area. Through the joint-venture, Dynea gains entry to a new market segment, broadens its portfolio and improves its competitive position in the Asia Pacific region. Dynea has produced adhesive resins for the interior wood application market in China with a wide range of product and service solutions for several years and has production in Shanghai, Beijing and Gaoyao City. Durante & Vivan has the technical, formulation and practical know-how regarding hot melt production and end-use applications together with state-of-the art production capabilities and equipment in the woodworking industry. The joint-venture will focus on serving customers in mainland China, Hong Kong, Macau and Taiwan, as well as all other countries in the Asia Pacific region.
Finnair Asian traffic continued to grow Finnair’s scheduled Asian traffic grew briskly in the first quarter of 2007. In March Asian traffic increased by 40 percent compared to March last year.
Innosonic opens an office in Shanghai Innosonic has opened an office in Shanghai at the Zhangjiang Hi-Tech Park. The office is responsible
for marketing and selling Innosonic products and services to China and APAC Region. Innosonic is a technology solution provider with staff currently in Finland, Slovakia, Germany and China. The enterprise develops total business concepts which help companies in publishing business to enhance their possibilities in multichannel publishing.
UPM sells Walki Wisa to CapMan UPM has signed an agreement on the sale of the Walki Wisa Group, a business unit of UPM’s Converting Division, to funds managed by the Finnish private equity investment company CapMan. The transaction is expected to be concluded in the second quarter of 2007. Walki Wisa is Europe’s leading producer of wrappings and composite materials for industrial applications. The production plants are located in Finland, Sweden, Germany, Great Britain and China, Changshu.
Wärtsilä opens new workshop in Shanghai Wärtsilä Corporation inaugurated in March the first phase of a new reconditioning workshop in Shanghai. The workshop will provide high-quality reconditioning services to owners and operators of marine engines, gearboxes, controllable-pitch propellers, thrusters and other ship equipment. This first phase represents an investment of EUR 2.3 million. The new workshop is expected to be in full operation by May 2007 and it will become one of the biggest reconditioning workshops in the world. The workshop is the third to be established by Wärtsilä in China.
UPM opens R&D Center and labelstock factory in Changshu UPM celebrated in April the completion of further investments at the Changshu mill site in Jiangsu, with the official opening ceremony of Asia R&D Center and a new labelstock factory. UPM Asia R&D Center will be responsible for local fiber raw material research as well as manufacturing and technical customer service support for UPM’s production units in China and Asia Pacific Region. The Chinese R&D Center will complement the know-how of UPM’s other R & D Centers in Finland, Germany and the USA. UPM Raflatac labelstock factory serves fast-growing demand for labels to meet packaging needs in China and the Asia Pacific region by supplying paper and film label materials for standard and special applications. The UPM Raflatac facility in Changshu increases UPM’s labelstock offering locally and creates new opportunities to serve markets across Asia. “Research and product development as well as high-added value products such as labelstock are important components in UPM’s strategy for growth in the world’s most important markets”, said Jussi Pesonen, President and CEO of UPM.
Tamfelt celebrates new filter fabric factory in Jiading
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amfelt’s filter fabric unit in China, Tamfelt Special Textiles (Shanghai) Co., Ltd. started the operation at the beginning of January 2007. The opening ceremony for the Shanghai plant was held in April.
Mr. Jyrki Nuutila, President and CEO of Tamfelt was satisfied with the completion of the first stage of the investment project. “Tamfelt has over 20 years experience of technical and economic co-operation with the Chinese textile and paper industries. The co-operation has intensified in the past few years, and at the moment Tamfelt has a joint venture with a Chinese company making paper machine clothing in Tianjin, where we are building our own fabric factory. Last year, when Tamfelt’s Board of Directors made the decision to build a filter fabric
factory in China, it was almost immediately clear that it would be located in the Shanghai area, which has the most modern infrastructure”, Nuutila says. Consul General of Finland in Shanghai, Ms. Päivi Hiltunen-Toivio also prises the location of the new factory. “Shanghai and Jiading Industrial Zone, the location found for the new factory, is an excellent choice, as Shanghai is the most important economic metropolis in China. It combines the best industrial and commercial traditions of modern China with the sophistication and cultivation of the lifestyle of the wealthy merchants who used to live here.”
FINNBIZ / MAY 2007
Specma Hydraulic celebrates opening
For Mr. Tatu Leppänen,General Manager of Tamfelt Special Textiles Co. Ltd., the ceremony day was filled with joy, but also the start of the hard work. “What has been done so far is of course just a beginning and the real work lies ahead of us. We came here to serve our valued customers. By being close to our customers, we can respond to their needs faster, better and with more attention to the detail”, Leppänen emphasises in his speech. Tamfelt is one of the world’s leading suppliers of technical textiles. The company’s main products are paper machine clothing and filter fabrics. The
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company was founded in 1797, and is part of the state-of-the-art Finnish forest cluster.
Specma Hydraulic (Shanghai) Co. Ltd. celebrated its factory opening in Lingang New Area in Shanghai beginning of March. The company supplies hydraulic fluid systems and power packs for the OEM (Origina Equipment Manufacturer) industry.
FEATURES FINNBIZ
Finnish environmental innovations enter China The Finnish Environmental Cluster for China (FECC) was established to internationalise Finnish environmental business activities. Cleantech Finland, representing FECC, brings together all Finnish public and private environmental operations for accessing the Chinese market.
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ECC, launched in June 2006, is a governmentally funded and supported venture between Finland and China. The mission is to promote and enhance co-operation in the area of environmental protection and sustainable development between the two countries. The important goal of the project is to commercialise Finnish environmental know- how.
“Finland is home to about 300 environmental companies with innovative new technologies and solutions. They could be in high demand in China, but entering the global market, where doing business is all about relationships, is not easy. Especially small and medium size enterprises don’t survive alone in China, no matter how high quality products they produce. In China top level governmental relationships need to be built up first, then operations at the lower levels become possible”, explains Antti Perttu, Executive Director of FECC-project.
Cleantech brand opens doors Even if Finland’s achievements in the environmental sector are internationally acknowledged, very little
has been done to make them better known in the constantly growing Chinese market. “For example Italy, which is not known for it’s environmental innovations, has invested a lot of money in order to get a share of this huge growing market. With 10-15 percent annual growth, environmental business is the fastest growing business in the world. Generally speaking the support from the Finnish government to promote Finnish environmental innovations abroad has not been sufficient.” Thus one of the main objectives of the FECC, which maintains offices both in China and in Finland, is to develop working partnerships with Chinese governmental agencies to exchange information on possible environmental practices between Finland and China. “Through Cleantech Finland, which represents various Finnish environmental operators such as companies, experts, and governmental institutions, FECC can provide the best solutions for different joint projects in China. Under the Cleantech Finlandbrand, enterprises can operate more efficiently since a carefully built up brand opens many doors, which otherwise might remain closed.”
To map out the bottlenecks Considering the possibilities to export Finnish environmental innovations to China, the problem is not the demand, which according to Perttu is unlimited. The main obstacles can be found at the Finnish end; market and corporate structures do not fully support the internationalisation. Also financial sources need to be developed further especially to support SME’s.
“To create novel, best suitable business structures and company clusters is essential in order to implement selected pilot projects together with Chinese operators. Our role is not to act as an enterprise, but to look for the bottlenecks, which could be obstacles for the Finnish environmental companies when entering the Chinese market. The ultimate goal is not just to create memos, but to really commercialise Finnish environmental know- how.”, Perttu clarifies the role of the FECC. “We started from zero last autumn, having our focus on greater Shanghai area. I do believe FECC is one instrument that will enhance commercialisation of Finnish environmental innovations, bringing them to a new level”, Perttu ends confidently. For more information and Cleantech events: www.fecc.fi
Cleantech Finland in a nutshell •Clean technologies include all products, services, processes and systems, which cause less harmful environmental impacts than their alternatives •Cleantech Finland identifies the best Finnish environmental innovations, technologies and knowhow to be utilised in Sino-Finnish projects •Cleantech Finland represents the Finnish Environmental Cluster combining know- how and experience of all key Finnish public and private environmental operators which together constitutes the Finnish environmental system
Finland has a lot to offer for EXPO 2010
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inland was the first Nordic country to make a decision to participate in World Expo 2010 in Shanghai. Minister of Trade and Industry, Mauri Pekkarinen, announced this decision when visiting Shanghai in January. One important destination of the visit was the EXPO 2010 office, where Minister Pekkarinen held discussions with the vice chairman of the office Mr. Zhou Han Min.
“China has become an extremely important, growing export market and investment for Finnish companies. It is possible to enhance economic co-operation between Finland and China further by participating in World Expo 2010”, Pekkarinen explains. The Minister also emphasises the fact that the Finnish business sector has advocated the idea of participation in World Expo 2010.
“It is of primary importance that the Finnish business sector is involved in the arrangements and financing from the outset. This is the only way to make Finland and Finnish companies to reap the maximum benefits from the participation.”
The next step for Finland will be nominating a high commissioner who will be responsible for the EXPO preparations. The commissioner will give the organisers suggestions, how Finland is going to highlight the main theme of the EXPO, which is “Better City, Better Life”. Since Finland has reached a high level in environmental protection, city planning and in energy saving, it has a lot to offer for EXPO 2010. Problems of urbanization, such as pollution and shortage of energy are clearly visible in Shanghai. Thus Expo is expected to offer some concrete measures for improving the quality of city life.
Kemira inaugurates paper chemicals plant Kemira inaugurated its new plant for pulp and paper chemicals in Yixing in February as part of its global strategy to increase presence on emerging markets. The plant initially produces chemicals for deposit control with an option for other product lines in the future. Kemira has produced water treatment chemicals on the Yixing site since 2001.
FINNBIZ / MAY 2007
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FINNBIZ INTERVIEW
Culture shock brought back to China Sulo Ranne would export from China to Finland the stimulating working environment where all the skills of the employees can be fully utilised. From Finland he would import courage to question what the boss asks you to do.
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hen Sulo Ranne, General Manager of Planmeca Medical Equipment (Shanghai) started to work in China 1996, Moscow was the most eastern part of the world he had ever visited before. Still his first conquest of China lasted for more than four years. Two years back in Finland was enough, and Sulo found himself in Shanghai again. Surprisingly, it wasn’t Sulo’s Chinese wife who was the most eager to pack-up their home again, but Sulo himself. What tempted the man back to this bustling and hustling metropolis?
Demanding and rewarding “My first impression of Shanghai was overwhelming. The enormous amount of energy everywhere is something that still fascinates me. The feeling of adventure, discovering something new every day is rewarding,” Sulo describes his hometown. Although he every now and then misses the blue sky of the North, his attempt to move back to Finland wasn’t a success. “Regarding working life, my return to Finland was quite complicated. Once you have adapted the Chinese way of living and working, stepping back into the Finnish system is everything but easy. For me, the culture shock in Finland was even bigger than the culture shock I experienced when I first came to China,” Sulo explains laughing. After the years in Shanghai, the working ambience in Finland felt a bit rigid and stagnant. “Here you can make full use of every possible skill and knowledge you ever possessed, so the strict boundaries in Finland between “my job and your job” didn’t feel reasonable
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FINNBIZ / MAY 2007
any more. Also all those regulations and different rules frustrated me.” Sulo prises the Chinese as a hard working people, but there are still many qualities and operation models he would bring along from Finland. ”People here would need more courage to question what they are asked to do. In Chinese culture employees don’t ask twice, even if they are uncertain what to do. Unnecessary mistakes are sometimes repeated purely because of that.”
A front row seat is necessary Even if China is a competitive market where the price level for many products is challenging, low price is not always a key for success. “Quality demands in China are high. There is a common misbelief, that on the Chinese market it is easy to get rid of all the products, which are not good enough for the European market. But this is definitely not the case. In order to succeed in China, top quality products and the latest models are needed, no matter what type of business you are in. Also high level services and a good, steady reputation are critical factors for success. Chinese people are very brand conscious and are not pleased with big changes.” But according to Sulo, there is one rule of thumb above all the others. ”In China - never give up! You just have to keep going, no matter how cold the wind blows. If you step aside, it is hard to come back. Here circumstances can change overnight and sooner or later the south wind blows gently again.”
FEATURES FINNBIZ
Building brands at KONE Imagine the skyscrapers in Shanghai without efficient systems of elevators.
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BCS March luncheon gathered members to Regal Hotel to learn about how KONE is building their brand. Guest speaker Mr. Tuomas Kahri, Senior Vice President, Global Marketing and Quality from KONE Corporation introduced how they have approached the important issue of branding. KONE is a company committed to moving people and managing people flow in buildings. The company provides its customers industry-leading elevators and escalators. It handles the installations as well as maintenance and modernization of the equipment. KONE helps to make the architects dream come true in terms of people flow in new and old buildings. KONE was established in 1910 in Finland. The company employs 29.000 people around the world and has about 11% of the global market share in its business area. Asia accounts for 12 % of the global turnover but growth in China is very fast. “The challenges for us are different in different markets,” says Mr. Kahri. “In emerging markets, the increased urbanization means that more high buildings are constructed. These buildings need to have an efficient solution for moving people in the building. In developed markets the aging populations and tightening safety norms pose a different
challenge. The highest buildings designed and built today are typically multi-purpose buildings, e.g. they have office floors, residential floors, shopping center floors, etc. This poses different requirements for the elevator and escalator equipment.”
Only one brand “At KONE we have a global approach to branding, we want to have only one brand worldwide. Our challenge is to establish an image about KONE, an image that is the sum of what people feel, know and see about us. My job is to manage that picture in your head,” Mr. Kahri describes. “Building projects typically have several customer groups that we need to address. Our final customer is the builder who is often price focused, so we have to influence the architects, consultants, developers, end users and facility managers minds as well. It is really important that we manage our corporate personality. All our activities as a company influence on that and all our messages build our brand. In order to support that, the first thing we had to do when we started the brand-process was to define the KONE brand content.” “We believe the basic customer needs are the same globally. Therefore we have decided to use global
Experts of Chinese Trade gathered in Shanghai The Chinese Central Government will focus more on social reform, growth is still expected to continue strong.
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Chinese trade co-ordination meeting was held in Shanghai, from 16 to 17 March 2007. The purpose of the gathering was to bring together Finnish experts in Chinese trade, and to discuss various issues in trade and economic relationships. Similar meetings have been held regularly over the past ten years, usually twice a year. All Finnish diplomatic missions (Embassy and Consulates) have been taking turns in organising the meeting. Originally, the participants came only from the diplomatic missions and Finpro. Since then, the invitees have included representatives from Finnish Business Council, Finnish Tourist Board (MEK) and Finnish Funding Agency for Technology and Innovation (Tekes). The meeting concentrates on issues facing Finnish companies in China, for example problems arising from a different business culture.
Finnish Ambassador to China, Mr Antti Kuosmanen, opened the meeting with a general update on China’s political and economic situation. Finland’s r e c e n t E U P r e s i d e n c y, followed by Germany, as well as celebrations of European
Union’s 50th anniversary in China, were also on the agenda. Other current topics included the Beijing Olympic Games in 2008, and the Shanghai World Expo in 2010.
marketing messages and adapt them to the local situation and the product and service content. Many of our marketing roadmap activities are global. They are mainly planned in Finland and China and the product and service offering and pictures are localized.” “We started increasing marketing actions in China in 2005 and our schedule is to have all basics in place this year. During this and next year we will focus on increasing awareness and interest of key customers and improve customer management. Additionally we will focus on the content of the brand.” “The brand is in the head of the customer. You have to decide what you want it to be and then manage the message consistently over the years. There is no easy solution to awareness, just hard work,” Mr Kahri concludes. as much as 47 percent. The growth was strongest in imports of telecom equipment. Machinery and equipment remained the largest group in both exports and imports. The Finnish trade balance deficit doubled from a year earlier. The next meeting will be hosted by the Hong Kong Consulate General, in October 2007.
There was also a lively discussion among the participants, on the ongoing National People’s Congress (NPC). The NPC approved a law on the protection of private ownership, as well as a tax reform, which will abolish foreign companies’ relative tax benefits over Chinese firms. It was stated in the discussions that China’s economic growth had continued robust at 10.7 percent, exceeding set targets. The growth is expected to continue strong. However, the Chinese Central Government tries to control the growth, addressing more attention to social reforms, like education, healthcare and environmental issues. Trade between Finland and China grew again considerably in 2006, making China the sixth largest trading partner for Finland. Finnish Exports to China increased by 26 percent, and imports from China by
Kuopio Symphony Orchestra gave concerts in Shanghai Kuopio Symphony Orchestra was honoured to represent Finland in this year’s Shanghai Spring International Music Festival, one of the oldest festivals in China. At the same tour, Kuopio Music Centre and Kuopio Symphony Orchestra jointly organised a concert together with Shanghai Opera House in May, as a cultural collaboration between Kuopio and Shanghai. Mayor of Kuopio, Mr. Petteri Paronen, visited Shanghai at the same period. The orchestra entertained its audience also in Hangzhou.
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