By Ren Bangying, Managing Partner, FinkRen GmbH, Switzerland,
More than 20 years ago, Swiss companies started to invest in China. Given the enormous challenge of being successful in a new market with a different culture, these companies relied on the support of experts. Most of these endeavors have proven to be successful, for both Swiss companies and their Chinese business partners.
Today, more and more Chinese companies plan to invest in Europe, and this represents an even bigger challenge. Why? Most Swiss companies may not have known China 20 years ago, but they did have lots of operational experience in doing business abroad. Yet, for most Chinese companies, this is not the case. In many cases, they are only now making their very first investments abroad, and learning about the differences between Chinese and European business culture.
FinkRen has worked with many successful Chinese companies. These companies have the financial capability to invest in Europe, a market that they perceive as a safe and stable place for their investments. Europe represents a big market for Chinese products and services, and also offers access to well-qualified people and advanced technology.
The strategies of these companies vary. Some want to develop in the international market, improve communication with international customers, or improve global after-sales service; others want to gain access to advanced technical knowhow, or set up a remote logistics base. In any case, their presence in Europe will help Chinese companies to improve their competitiveness, both in China and worldwide.
Some Chinese companies already run quite big organizations in Europe. Some of them are very successful, others not. What makes the difference? The successful companies have understood the importance of soft skills.
One such example is Lyric Robots Ltd., a privately owned company in Guangdong Province and one of the top five suppliers of customized assembly automation within China. The company wants its products to become the preferred choice for automation equipment in international markets. Lyric has hired FinkRen to support them in establishing a partnership with a strong player in Western Europe. Such a partnership will allow Lyric to learn the characteristics of business in Europe step-by-step, and to benefit from international talent in areas such as the Greater Zurich Area (GZA). From here, Lyric will succeed not only in expanding their business within Western Europe, but the rest of Europe too.
Another example is Lingyun Industrial Group in Hebei Province. Lingyun Group is a leading company in the Chinese automotive supply industry. In 2012, it acquired the internationally active German company, Kiekert Ltd. Since then, Kiekert has experienced rapid growth both in sales and profits globally. Kiekert has developed into the sales and production bases of Lingyun Group in Germany, USA, Czech Republic, Mexico and Russia. And through this investment, Lingyun Group has reached a new milestone with more than 10 billion CNY in revenue.
If we look at the experience gained over the last few years, being well-prepared is the most important factor for successfully investing in Europe. A clear strategy is needed. Secondly, investors need to learn how to run a European company; their company will not succeed if it is run like a Chinese company. Developing the necessary soft skills and understanding European business culture are key elements to success. And for this, Chinese investors should seek advice from experts. As we say in China: “If you do not know the road ahead, ask someone who has traveled it”.