This weekend we can read in media that the Chinese President Xi Jinping introduced the Belt and Road initiative to the world. We have to say a very interesting foreign policy initiative and looks like a free trade initiative when we lately have mostly heard and read about import restrictions, new tariffs and building walls around a certain market. President Xi Jinping asked for closer cooperation among countries across Asia and Europe but also introduced infrastructure investment to promote this Chinese-led initiative to expand trade links across the region, the new ”Silk Road” to and from China. This is a multi billion dollar project to enhance infrastructure and build roads, ports, railways and other facilities. It covers not only China but 65 countries reaching from the South Pacific through South and Central Asia to Europe and Africa.
Will China be able to be the project leader for this huge project that can help them go back to better growth figures in their economy? Perhaps, President Xi Jinping said China will contribute an additional 100 billion yuan (some 15 billion USD) to the Silk Road Fund that was set up back in 2014 to finance some of the infrastructure projects. He said his government will provide aid worth 60 billion yuan (9 billion USD) to developing countries and international organizations. The question now is if others will follow such as Japan, ASEAN, India or perhaps EU?
More Scandinavian brands necessary in Asia
For sure Scandinavian companies need to work more on growth in China and Asia. Chinese and other South East Asian markets are still growing fast in comparison to EU and USA that we focus on the most now. New middle class of consumers are growing and they are interested in Scandinavian and European brands. For example, in China, it is very important for the middle class to show that you wear certain brands in clothing, eating in some places, drinking some goods and brands, etc. Swedish companies such as H&M or IKEA are growing very well but how about all the medium and smaller size businesses that has potential to become big in China? We like to see more small and medium size grow in this market too.
We see a huge market for Swedish and European brands in China. Especially for Swedish brands that are often in the market segment under premium where premium is Armani, BMW, Chanel, DIOR, Rolex etc. It is the big but growing middle class that has the greatest market potential, especially for the smaller and medium size businesses but of course also for larger enterprises such as Ericsson, Volvo, H&M and IKEA. In order to reach these consumers, however, a lot of capital is required and we recommend partnerships in Sweden through cooperation, or in the market you want through partnerships or joint ventures or distributor solutions. As a business consultant, we do not recommend investment and establishment in China unless you have a certain size or financial resource at hand. The market opportunity is great but also the risk and there are many hurdles. Better to establish in Taiwan, Hong Kong or some of the key ASEAN markets and grow your business in both Asia and China but have more legal flexibility to move resources and finance around in the region. Many of these markets have good trade agreements in place and experience doing business in China. Your Chinese Strategy can be “Greater China” strategies where your Asia headquarters are outside China, or perhaps in Hong Kong.
We are a business consulting firm that help our customers in a cost efficient way to build stronger brand and better business in new markets, both here in Scandinavia and in Asia. Best way to invest in a market is step by step and we can help you in this approach to any market. Some of our services are also executive recruitment and staffing of specialists in engineering, sales and marketing. We have our own network of consultants and contacts that can help you grow your business here in Nordic. Beside recruitment and staffing we provide many communication and marketing service to help your build up a brand and business in Nordic.
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