Sweden was recently nominated “The Most Attractive FDI Country” by a group of Chinese participants; among them the Chinese Ministry of Commerce. The nomination was part of “Contribution to Chinese Enterprises Going Global Award”. One factor behind the nomination is Invest in Sweden Agency’s (ISA) successful work in attracting Chinese companies to set up business in Sweden. ISA has its own representation in China since 2002. Sweden seems to be a very attractive country to invest in.
We are used to hearing about the big business opportunities for Swedish companies in China. 1.3 billion people and strong economic growth results in an enormous export potential. However, there is an aspect rarely mentioned in the China debate; China may become world leading in research and development. Each year, 400 000 new engineers graduate from Chinese universities. That is three times more than from the entire EU. New technology originates from an idea and the number of new technologies explodes when these well educated people get access to the required tools to generate ideas and do something with them. Many of the most important inventions in world history come from China and history will most likely repeat itself.
It is probable that in the next years, results from current research efforts, like environmental issues, will become more successful. Government and the rest of society will see a bigger profit potential than cleaner countries to encourage the commercialisation process. Consequently, a world leading position in environmental and energy technology will probably be achieved.
Since 2000, the Chinese government has actively encouraged Chinese companies to set up abroad through the “Go Global Policy”. An increasing number of Chinese companies do this, for example, Lenovo, China Mobile and ZTE. Larger markets get more foreign representation, but Sweden has a good reputation and attention opportunities in China.
World leading technology should create good conditions to build global brand names. The combination of low cost, leading technology and active international marketing will probably create massive competitive pressure on Western companies. There is a big uncertainty today around the Chinese capability of international marketing and creation of global brand names. The Japanese and the Koreans experienced similar challenges. In addition, strong Western brand names are making it harder for the Chinese. Western companies will most likely assist the Chinese with the international marketing efforts. This will result in a larger acquisition activity; a more integrated and refined trade and a number of business opportunities for nimble entrepreneurs. A Swedish company may get Scandinavian representation for a new interesting product from China and suddenly create a new Swedish export company. There will also be opportunities to get a more profound liaison with the Chinese partner. Further development, country adaptation, design and logistics create value added activities for the Swedish partner. We will have to review our role in the value chain with limited control in design, product development and marketing. Li & Fung, a Hong Kong based trading company, may inspire to how trading companies should proceed to increase in importance and to avoid just transporting goods between countries.
We need to adapt educational systems, research, public subsidies, trade promotion activities etc. All social institutions, including the citizens themselves, should work together towards a joint goal for a common and powerful impression. In that regard, Innovation Norway is an inspiration where several country promotion organisations came together under one name.
Sun-tzu taught us to be close to our friends, but even closer to our enemies. By being present in China, we can learn from each other. Learning what is going on around us becomes a way of preparing for challenges. This applies to large industrial export companies as well as to inventors, newly established companies, service companies and other companies of various size and business. We may ask what business, product, service or company will be mostly affected. Trade promotion will become more important and contingently the perspective needs to widen to see how businesses, regions and company size prepare for change.
One way for Swedish companies to prepare is to keep in touch with existing organisations who offer assistance like exchange of knowledge and contacts. It’s about Sweden’s future and world position. We need to be prepared for challenges Sweden’s industrial life will face in the future. Historically, our prosperity has increased when we have taken advantage of changes around us and we now face another opportunity to regain a leading position in the wealth league. Let’s not miss the chance!