Proverbs could also be used as a description of the financial development we are experiencing right now. I’m not talking about recent turbulent times in the US financial sector that spilled over to other parts of the world, even though it gives a hint of more substantial changes facing the “old world”.
I refer to the ongoing industrial globalisation and the affect it has had beyond the eastern horizon, ie China and especially what it means to us in the “developed world”.
With my own eyes, I have seen China’s development since 1987 (as a young management trainee at Sandvik I visited and worked in Beijing). To me, it is obvious that westerners don’t quite understand what is going on. Why, you say, everybody knows that China is developing into a fantastic market for us. China is the new engine in the world economy swallowing raw material, steel and consumer goods at full speed.
Yes, it is true. China has obviously gone from a potential export market to our companies, to becoming “the world factory”. We have moved our production to achieve cost advantages and to maintain our western competitiveness. The fantastic development of the Chinese domestic market in recent years, as well as demand for most of our products and services, has been a bonus for companies moving production to China.
However, this knowledge is not enough. It would be like “not seeing the forest for the trees”. Not only western companies benefit from the growing Chinese domestic market. If you split the world in teams, the great winners of the past years’ development and globalisation, are “them” not “us”.
In the past 20 years, there are a great number of Chinese companies (many more than the western ones) that have grown with western knowledge transfer as well as with accelerating capitalism in China. As an example, I would like to mention a Chinese fashion company (might sound like a paradox). The company is called SEMIR. They have the same business idea as our own flagship Hennes & Mauritz – they design, manufacture and sell fashion to the age-group 16-35 years. They even admit having H&M as a model. The difference is that in the past 10 years, SEMIR grew by 30-50 percent a year and have more than 2000 (!) shops in China only – more than H&M globally!!
I would like to state that SEMIR is a typical Chinese company. In the management nobody is older than 35 years and nobody speaks fluent English (so far). Nobody in the company has experienced financial set-backs and they have western companies as models. Not only do they copy business ideas and operation methods, but also growth strategies. This will inevitably result in expansion abroad.
Before long, maybe three to five years, I believe SEMIR and other similar Chinese companies will actively look for new markets - just like we did after the Second World War when Atlas Copco, Electrolux and ASEA were very successful in the international arena. If not earlier, we will then automatically learn names of products and services that are totally unknown to us today. Names like Huawei, Li-ning, SEMIR, Chery etc will become just as well-known and attractive as Ericsson, Adidas, Zara or BMW.
Believe it or not – but just like Caesar once crossed the river Rubicon and coined the phrase ”alea iacta est” – globalisation will affect our everyday life and it will happen much faster than some of us want. Some of us might get alarmed by this development. I personally look forward to it. Finally, companies willing to invest and open up subsidiaries in our part of the world! This is a fantastic opportunity to participate in building something new and where we could contribute (and make money) with local knowledge.
New factories will open in Europe (physical distance is still the same despite globalisation) and new job openings will be created (by foreign employers). It is not we or them – but we and them.
We just need to be prepared to look attractive to these new employers and world corporations – maybe it is time to sign up for a course in Chinese...?