PTL Group gains ISO 9001:2008

Posted by Elena Luk'yanenko
Elena Luk'yanenko
Elena has more than five years of experience in international marketing providing services for the foreign com...
User is currently offline
on Monday, 22 November 2010
in Business in China
Shanghai, 22 November 2010 - Following a process lasting almost two years, PTL Group has had its work processes accredited to the internationally recognised quality management system standard, ISO 9001:2008.

“Achieving ISO 9001:2008 certification is an important milestone for PTL Group. This certification illustrates to customers our strong commitment to quality at all levels of our organization.” said Zvi Shalgo, Chairman and CEO. “Customers want to be confident that they are doing business with an organization that can meet or exceed their needs in a timely manner. Successfully completing the rigorous process required for certification is a clear sign that we are devoted to continually improving our quality management systems."

"In working towards this award, we have analysed and challenged every aspect of PTL Group's operations, involving every employee and a number of clients. This has resulted in many improvements to both what we do and how we do it,” he continued.

The award was made through NQ Global Assurance, a leading assessment, verification and certification body and works in partnership with a wide range of businessesto help improve performance in quality, environment and health and safety management. In the future the audit will be performed every twelve months from the date of certification to ensure maintenance of standards.
Tags: Untagged

PTL Group Hosts Official Delegation from Changzhou in Israel

Posted by Elena Luk'yanenko
Elena Luk'yanenko
Elena has more than five years of experience in international marketing providing services for the foreign com...
User is currently offline
on Sunday, 21 November 2010
in Business in China

Tel Aviv, November 2010 – PTL Group hosted an official delegation from Wujin District (Changzhou City, China) in Israel. The delegation, headed by Wujin deputy governor, also included the Director of the Administrative Committee of Jiangsu Wujin Economic Development Zone (WEZ), three vice directors from the Organization Department , the Administration Office and the Development & Reforming Bureau of the Municipal Government of Wujin District, and a project manager from the WEZ.

The delegation toured in factories from South to North of the country, and held a series of meetings with Israeli industrialists organied by PTL Group. The visit agenda included meetings with Israeli companies that already operate in China, and other companies which are considering to establish a production facility in China.

This is the first delegation to arrive in Israel from Wujin Economic Development Zone.

Wujin is located in Changzhou City, in the center of Yangtze Delta Region, the most developed region in China. The area is developing rapidly in recent years and Changzhou city becomes an important center of the industrial triangle in Jiangsu province.

By the end of 2009, more than 3,100 foreign enterprises from above 100 countries and regions have established presences in Changzhou, 45 of which are Fortune 500 companies.

The city's attractiveness stems from several factors:

  • Its excellent location (about 40 minutes by train from Shanghai or Nanjing)
  • High level infrastructure
  • Construction and operation costs are relatively low
  • Consumption power in the city is on the rise. In 2009, GDP of Jiangsu province reached 37.05 billion USD, an increase of 11.7% over the same period a year earlier. GNP per capita was 10,000 USD in 2009, well above the average in China.
  • Quality of local government is another factor that encourages foreign companies to settle in the city. In the latest “2009 China City Competitiveness annual” Changzhou was selected as the city with most innovative municipal government and ranked the third in terms of municipal government service capability.
  • The local government actively supports and promotes foreign companies from the following industries: machinery, electronics, IT, renewable energy, advanced materials and bio-pharmaceuticals.
  • PTL Group currently manages a construction project for the Israeli factory in Wujin and we enjoy effective support and cooperation. We also examine options for future projects at this location because of the benefits local government provides to the foreign investors and the region's rapid development.

The purpose of this delegation's visit was to establish familiarity with the Israeli industry and to examine cooperation with Israeli companies from the target industries of Changzhou city.

Mepi Frankel, Director of PTL Group, escorted the delegation during the visit. His target was to strengthen the contacts between the representatives of the Israeli industry and Wujin Economic Development Zone and to promote future projects of PTL Group’s clients.

Stone Shi, Director of the Administrative Committee of Jiangsu Wujin Economic Development Zone, was impressed by the Israeli technological innovation and said that the visit reinforces his feelings about the Israeli industry. “It's my first visit to Israel but certainly not the last", he said.

Tags: Untagged

PTL Group Shares Secrets of Successful HR Management in China

Posted by Elena Luk'yanenko
Elena Luk'yanenko
Elena has more than five years of experience in international marketing providing services for the foreign com...
User is currently offline
on Thursday, 21 October 2010
in Business in China

On October 20, 2010 training institute De Baak held a Master class on Human Resources Management in China at the recently launched Dutch Design Workspace in Shanghai. It was attended by senior managers from Dutch firms and governmental organizations. Zvi Shalgo, CEO and founder of PTL Group and Harry Genfa Liu, Deputy Director General of CELAP were invited to share their experience in managing HR in China.

Harry Genfa Liu focused on a historical aspect of HR in China and the ways it affects Chinese companies today, while Zvi Shalgo presented a hands-on approach on m Chinese employees backed up by real life cases based on his experience.

According to Zvi Shalgo foreign companies penetrating into the Chinese market, need to come up with an HR strategy specifically designed for the Chinese market. “Some companies make a mistake by implementing the European HR strategy on China operations”  he stresses. “Foreign companies need to be aware of the culture differences and align their “China strategy” with the local HR environment. Job hopping is a popular phenomenon in China, thus keeping your employees loyal to your company is a challenge to say the least.” Shalgo continues by mentioning the raise in salaries over the years in big cities like Shanghai.

“If I compare salaries I paid when I set up office in Shanghai 10 years ago, they are double from what I am paying today. There is an ever-growing job market and it's getting harder to find local talent.  Due to the lack of local talent in China companies end up fighting over the few available talents. It is a very competitive environment to operate in.”  According to Zvi Shalgo HR strategy in China should be designed for long term where foreign companies seek to create a platform of stability, self development and engagement of local Chinese employees.

Presentations were followed by round table sessions where Master class participants had a chance to discuss specific HR issues. During this session, participants of the Master class took the opportunity to educate themselves on several China HR topics, such as: differences in salaries and recruitment procedures compared to Europe. At the end of the day there were positive reactions among the audience of the Master class. They got a better understanding of HR in China and how it differs from the European standards.

Tags: Untagged

Expanding Production Closer to Target Markets - The China Case

Posted by Elena Luk'yanenko
Elena Luk'yanenko
Elena has more than five years of experience in international marketing providing services for the foreign com...
User is currently offline
on Friday, 30 July 2010
in Business in China
TEL AVIV, JULY 29 - About 40 senior managers from Israel local industries came to the professional seminar, organized by PTL Group in cooperation with the Kibbutz Industry Association.

The seminar was opened by Amos Shalev, head of the export department of the Kibbutz Industry Association and a senior exporter himself. Shalev referred to the fact that we are now in a period of change. “Today, he said, operating in emerging markets is a necessity. Production in China for the Chinese market is the order of the day”.

Mr. Shalev dispelled the negative image of factories in China, and shared his own experiences from plants he visited there that had left a good impression on him. “These plants”, he said, “are impressive and effective thanks to good management and full responsibility of the Israeli companies”.
 
 

Zvi Shalgo, CEO and Chairman of PTL Group and the Chairman of the Israeli Chamber of Commerce in Shanghai, reviewed the current trends in Chinese markets.

Mr. Shalgo described the privatization process in the Chinese market and noted that today less than 30% of companies are state owned while the rest of the Chinese market is open to competition. This competition however, he explained, is limited and controlled by government. In this context he referred to the business license’s restricted ‘Scope of Business’ and the expectation from foreign companies to contribute knowledge or investment in their China operations.

Mr. Shalgo reviewed the rise of the Chinese private companies, referred to the government support they enjoy and showed how the gap between Chinese and Western industries is narrowing, both in China and in global markets.

The next speaker at the seminar was Ilan Maimon, an experienced industrial entrepreneur in China. As a partner in PTL Group Industrial Project Management initiative, Mr. Maimon discussed the process of establishing a factory in China: from defining the company’s needs and planning the project in general, through finding a location and negotiating with the government, until the actual design, construction, certification and approvals for the new plant.

Mr. Maimon related to the practical aspects of setting up a manufacturing facility in China. He stressed the importance of effectively managing relationships with the local government and efficiently managing procurement processes. He also referred to the exceptionally rapid pace of construction in China and to how crucial it is for company professional teams to guide and supervise the running-in period. Finally, he presented and discussed a new project being built these days: PTL Group’s Industrial Park & Greenhouse in the city of Changzhou.

Roger Lu, CFO and VP Upstream of PTL Group, opened it with a discussion of government relations and permits in China. Mr. Lu, who has over 10 years of financial management experience in foreign companies in China, is a PTL Groups’ leading contributor to negotiations with local governments on the Licensing and Registration of Manufacturing Sites in China.

Mr. Lu opened explained that without government support it is very difficult to do business in China. Therefore, he said, before beginning the licensing process, the foreign company should obtain the government's commitment to support the Business.

Before starting a construction project one must ensure that the plant can receive all necessary permits for manufacturing and selling, build a schedule and expedite the process towards the target date. “Good relations with the government”, he said, “can shorten the licensing process from two years to six months.

Regarding negotiations with the government, Mr. Lu recommended to prepare a flexible investment model in advance. He suggested not to attend a meeting and try to find out what are the support options, but to present the project, arouse the government interest in it, and only then begin negotiations on the various options for support.

The seminar was summed up by Shai Givon, CFO of Lycored Group, a global company supplying raw materials to international companies in the dietary supplements and food industries, such as Nestle, Herbalife and others. Mr. Givon is in charge of the Lycored Factory and Logistics Center Construction Project in China, which is managed by PTL Group.

He explained that Lycored started the construction project of a new factory in China in order to provide a better service to their customers in the South East Asia and to satisfy their supply needs. Mr Givon shared with the audience some of the intra-company processes needed to be carried out prior to the beginning of the project.

He addressed the “China Phobia” that characterized both Western shareholders and clients, and presented Lycored's way to cope with it. As he said, it took three years to overpower the fears, by reducing the risks of the project significantly and by involving the clients in the planning process. Lycored was looking for a business model that will not include the considerable investment on land and factory construction, explained Mr. Givon. Accompanied by PTL Group’s team they were looking for an industrial park that will be open minded enough.  And as he said “the Chinese flexibility came through”.

At the moment the the factory is in latest stages of construction and Lycored is in the middle of recruitment process for the Chinese subsidiary. Mr. Givon shared with his listeners some lessons derived so far:
  • Learn from others’ experience – visit all relevant factories in the area.
  • Open your mind; learn to work the way and in the rhythm of the Chinese.
  • It’s crucial that negotiation will take place in the presence of your Chinese representative, that can handle the local negotiation style.
  • In China a personal commitment worth more than a contract.
  • Setting up a factory with a local partner is not recommended.
  • Although people think that China is Capitalist – it isn’t. The government has a stance and decisions are not necessarily economic.
  • Look for places that want your factory, offer incentives and even funding.
  • Local managers and workers are in a high professional level, not less than in the West. It’s just a matter of fee.
The event concluded by a lively free discussion following question from the audience. The listeners were eager to get hands-on information about costs, they were worried mainly about quality control, supervision means and other management issues.
Tags: Untagged

China’s Paradox of Talent: HR survival strategies

Posted by Administrator
Administrator
Administrator has not set their biography yet
User is currently offline
on Thursday, 29 July 2010
in Business in China

The Chinese labour market is a paradox of talent. Despite a large workforce there is a shortage of skills. The resulting excess demand for talent has created a seller’s market. Skilled locals have more employments options and are more likely to leave current employers if they feel dissatisfied. These employees seek career advancement, new challenges and opportunities. Employee retention poses a challenge to firms, with high turnover rate of around 20.8% and 21.8% in 2009 according to Hewitt China.

Seminar: Successful Management in China

Posted by Elena Luk'yanenko
Elena Luk'yanenko
Elena has more than five years of experience in international marketing providing services for the foreign com...
User is currently offline
on Friday, 23 July 2010
in Business in China

Tel Aviv, July 21, 2010 - About 50 senior financial managers from the local companies attended the professional seminar, held by PTL Group in cooperation with PriceWaterhouseCoopers.

The seminar was opened by Zvi Shalgo, CEO and Chairman of PTL Group and Chairman of the Israeli Chamber of Commerce in Shanghai. Mr Shalgo reviewed the latest economic moves of the Chinese government and discussed Chinese companies breaking into global markets. He noted their hold in China’s domestic market and the government support they enjoy. Yet, these companies are set to face challenges arising from newly forming global competition rules, which also provide new business opportunities.

"Research & Development is currently the main bottleneck of the Chinese industry. The ideal business solution would be to create real partnerships between Israeli Startups that are strong in technological development and large Chinese companies. Yet, this is not happening due to fears of copyright infringement"

Mr Shalgo stated that copyright issues often prevent hi-tech industry from entering China. However, as Chinese companies start to develop original products, China will need to strengthen copyright enforcement policies, which will soon be of great interest to major Chinese companies aiming for global markets. Changes in this area are expected to take place.

Panel members from left to right: Assaf Steinberg (PwC Israel), Tal Reshef, Zvi Shalgo (PTL Group), Arie Schreier (PTL Group)

Arie Schreier, VP Downstream of PTL Group, clarified a myth foreign companies believe about business in China. According to Mr Schreier "those who come to China pre-suppose the existence of fields that will be out of their control, or that they should avoid. He notes the essentiality of transparency and supervision of the whole supply chain - from production through sales, shipping, distribution, credit management and collection. He said,"Despite the concern of many foreign companies, it’s certainly possible to build infrastructure that will coordinate information and allow full inspection of work processes in China just as in source markets. This is the way to achieve competitive pricing in the Chinese market."

Roger Lu, PTL Group’s CFO, who maintains regular contact with Chinese authorities for company clients, spoke next: "China has many rules and regulations, but everything is subject to negotiation, you just have to know how to manage it" Roger also referred to the differences between the process of conducting negotiations of the Israelis and the Chinese, and shared the different benefits one can obtain from local government to establish business operations in China.

Assaf Steinberg, Senior Manager at PWC reviewed possible business structures and types of activities in China and their implications in terms of tax and profit removal laws of China. His lecture concentrated on the dramatic change that has occurred since the reform of tax policy on 2008. He also addressed the increasing openness of China and the uncompromising government attitude towards manipulations of transactions. He said that "currently the hottest topics in China are capital gains tax, duty of record and report, and the transfer of tax from local authorities to national authorities”. He further stated that "tax authorities in China are becoming more sophisticated, in line with the rules of the global market."

Tal Reshef, a researcher and lecturer on business culture in China, discussed the concept of management and administration in ancient China and its contemporary role. Through stories about the Emperor of China, Mr Reshef demonstrated basic concepts regarding Chinese culture: centralization of power, the harmony of opposites and China as the center of the world.

The event was concluded by Eran Lesser, Co-CEO of John Bryce Training, which provides advanced IT training in Beijing and Shanghai. Mr Lesser described the company's considerations and the processes leading to expansion into China. He introduced their business model which uses the physical, legal and managerial infrastructure of PTL Group. He also discussed the advantage of being able to form collaborations with local bodies in China such as universities, magazines or industrial parks. At present, the company is considering expanding its operations in China.

Tags: Untagged

Waste Management In China

Posted by Elena Luk'yanenko
Elena Luk'yanenko
Elena has more than five years of experience in international marketing providing services for the foreign com...
User is currently offline
on Wednesday, 14 July 2010
in Business in China

One Man’s Trash:  China’s Growing Waste Problem

No nation has witnessed a growth in waste at the rate that China has seen in the past two decades. Industrialisation and an urban population explosion have propelled China to overtake the USA in waste generation in 2004. Urban areas alone generate 1.5 billion tons annually or 1kg per capita daily.

China’s Waste Management systems have failed to develop to manage the increasing amounts of waste. The domestic industry does not have the necessary infrastructures or expertise in efficient collection, treatment, disposal of waste nor designing and operating facilities.

Posted by Elena Luk'yanenko
Elena Luk'yanenko
Elena has more than five years of experience in international marketing providing services for the foreign com...
User is currently offline
on Wednesday, 14 July 2010
in Business in China

The task of building a factory becomes more complex in China. It is imperative to have the right skills, knowledge, experience regarding each stage in the process of setting up a new entity in order to obtain the best possible site and agreement. Undertaking such a task in China requires an in-depth understanding of cultural differences, local regulations, negotiation processes and management strategies in addition to experience and connections in the local markets. The key to success of any industrial construction project lies in proper financial management, which should not be neglected.

This article covers the following stages of industrial project management:

  1. Picking the right site for your business
  2. Negotiations
  3. Construction
  4. Management 

Success requires Cultural Understanding and Hardwork: Ilan Maimon shares his China business experiences and insights

Posted by Administrator
Administrator
Administrator has not set their biography yet
User is currently offline
on Wednesday, 14 July 2010
in Business in China

PTL Group was highly fortunate to have an opportunity to talk with Ilan Maimon, CEO of Sigma Group, an experienced industrial entrepreneur and multiple business owner in China. He is also a partner in PTL Group Industrial Project Management initiative. Ilan describes himself as a businessman, who is a mechanical and electrical engineer by profession.

What brought you to China?

Ilan: I am originally from Israel, where I was a partner in a software company. With the Dot-Com crisis in 2002, I decided to quit my current position and make a major change in my life. So I came to China.  I worked as a General Manager for a few companies while starting my own in parallel.

What are the areas/current projects you are working on? Tell me more about your business and what you do?

A Green China: Trends and Investment Prospects for Foreign Firms

Posted by Administrator
Administrator
Administrator has not set their biography yet
User is currently offline
on Wednesday, 14 July 2010
in Business in China

 

China is making a significant commitment to the environment.   The recent growth of renewable energies and eco-industry reflect the sustainability trend.  Currently the largest global emitter, China aims to reduce emissions by 40-45% for every unit of GDP by 2050. Pollution and environmental issues have resulted in an economic loss of 10% of GDP reflecting the necessity of sustainability for long term economic success.

Decreasing reliance on coal will be the key to success.  New Government statistics estimate by the end of 2010, over a quarter of electricity will be generated via renewable sources. The growth of this sector has outpaced that of the coal, and now account for over half of gross energy capacity. Among renewable energies, solar and wind energy are the two fastest growing.

Social Security in China

Posted by Elena Luk'yanenko
Elena Luk'yanenko
Elena has more than five years of experience in international marketing providing services for the foreign com...
User is currently offline
on Thursday, 24 June 2010
in Business in China

Social security, also commonly referred to as mandatory benefits in China, is quite straightforward to explain as a concept; however, the calculations to arrive at the correct contribution to be made by the employer and each employee can be complex. This is especially true when employees come from different cities in China or have different working locations.

 

There are six categories of social security in China. They are:

 

- Pension
- Medical insurance
- Maternity insurance
- Unemployment insurance
- Accident insurance
- Critical illness insurance

 

As a general rule, employers should make a contribution to each of these types of social security on behalf of their employees. Employees are also required to make contributions to some of them. The contributions are set as a percentage of average monthly salary.

PTL Group advises Dutch Companies to Obtain a Share of the Chinese Clean Tech Market

Posted by Elena Luk'yanenko
Elena Luk'yanenko
Elena has more than five years of experience in international marketing providing services for the foreign com...
User is currently offline
on Thursday, 24 June 2010
in Business in China

Driebergen, The Netherlands, June 23, 2010 - DeBaak has held the seminar “China and Sustainability: Green Technologies”  focused on the growing trend of green technology in China and its significance for Dutch companies. The seminar aimed to showcase and discuss China’s changing stance on the environment and the opportunities it provides for the Netherlands to both gain and contribute to the development of this sector.

The issue of price and quality of clean tech items and purchasing from China was especially addressed. Kitty Eegerdingk of Tebodin commented on the price differences between Dutch and local firms. She notes that Tebodin markets towards multinational companies as working in high standards in China causes Tebodin’s price to be triple that of local engineering companies.

Eline Mertens-Barkel from Ingreennious stated that due to quality control issues regarding high-end production in China, the company diverted their purchasing to European suppliers.

Zvi Shalgo, CEO of PTL Group, emphasized the inevitability of purchasing in China in order to remain competitive: “Purchasing from China is inevitable as we will not be able to compete with Chinese producers without purchasing at the same price levels. If today a Chinese engineering firm can provide it's services for 1/3 of the Tebodin price, when the knowledge transfer period ends (and in China it's quick) these local companies will control the market.” Mr Shalgo further recommended that Dutch companies should obtain a share of and be present in Chinese markets and work in the demanding environment there, in order to remain competitive should Chinese producers enter the European market. He also identified Research and Design as the key area with opportunities for Dutch firms.

Tags: Untagged

Contract signed to start construction of LycoRed factory in Wujin Economic Zone (managed by PTL Group)

Posted by Elena Luk'yanenko
Elena Luk'yanenko
Elena has more than five years of experience in international marketing providing services for the foreign com...
User is currently offline
on Thursday, 10 June 2010
in Business in China

CHANGZHOU, JUNE 9 – Global leader in nutrition and fortification solutions, LycoRed Limited, signed a contract for a construction project of the factory in Wujin Economic Zone (WEZ), Jiangsu province. The factory construction project is managed by PTL Group.

The contract signing ceremony was held in the Wujin administrative center in presence of Consul General of Israel in Shanghai, Jackie Eldan, Party Secretary of Wujin District, Shen Ruiqin, and Vice Mayor of Wujin, Ling Guangyao. LycoRed Limited is the first Israeli company investing in Changzhou.

“This is the first time for the Israeli company to settle in Wujin and we want to use this step as a bridge to strengthen ties and cooperation between Israel and Wujin,” said Jackie Eldan, Consul General of Israel in Shanghai.

“In the process of recommending Changzhou WEZ to LycoRed Limited, PTL Group confirmed the quality and operational advantages of the Wujin. We are already considering future projects in this fast developing region,” said Zvi Shalgo, CEO of PTL Group.

“This construction project underpins our goal of making LycoRed's unique proposition available and accessible to all of our customers, wherever in the world they operate", said Morris Zelkha, CEO of LycoRed Limited.

The construction of 7,000 square meters plant in WEZ begins immediately and it will be commissioned at the beginning of 2011.

Wujin Economic Zone occupies an area of 58 square km.The economic zone explores a way of ecological development with emphasis to the development of bio-clean industries represented by new materials, equipment manufacturing, bio-pharmaceutical and medical equipment.

Tags: Untagged
Posted by Administrator
Administrator
Administrator has not set their biography yet
User is currently offline
on Saturday, 24 April 2010
in Business in China
Below is a selection of some of the questions many China operations teams are grappling with right now. As you read these, it is worth noting that the further you delve into any one of these issues, the more complex it becomes. In the end, the key to answering all of these questions is having the right people on the ground in China.

1. Does your company have a legal obligation to facilitate the organization of a local labor union in its China-based factories? What is the appropriate response to a visit from local union officials requesting unionization?

2. How are China's new policies that promote "indigenous innovation" affecting your industry? Are domestic competitors using these policies to gain an advantage in government procurement, funding for research and development (R&D), or tax breaks? And is application research done by Chinese scientists in your Shanghai R&D center considered "indigenous innovation"?

Tags: Untagged

How do we prepare for the ‘Roaring Dragon’?

Posted by Elena Luk'yanenko
Elena Luk'yanenko
Elena has more than five years of experience in international marketing providing services for the foreign com...
User is currently offline
on Monday, 22 February 2010
in Business in China
This question and several others have been attempted to address during the ‘China Challenge’ Seminar at ‘de Baak’, Driebergen the 27th of January, 2010. Zvika Shalgo, CEO of PTL, with his keynote speech, and the panel moderated by Harry Starren, CEO of de Baak, have educated us on several topics concerning doing business in and with China. When we go, what will be the drawbacks? Can we control this dragon, taking over the world economy and coming to our small country? How should we set up a business there and how will we be successful? Also, how can our European institutions, facilitate for Chinese companies? How can we be both attractive, though also protect our own industries?

The China Challenge seminar in the Netherlands

Posted by Elena Luk'yanenko
Elena Luk'yanenko
Elena has more than five years of experience in international marketing providing services for the foreign com...
User is currently offline
on Wednesday, 10 February 2010
in Business in China

Thursday January 27 a seminar titled ‘China Challenge’ was held at country estate ‘De Horst’ in Driebergen. The seminar was organized by de Baak and consisted of a presentation by Zvi Shalgo, CEO of the PTL Group (a management company active in China), followed by a panel discussion led by Harry Starren (director of de Baak). The panel consisted of Zvi Shalgo (PTL Group), Helmy Koolen (Benelux Chamber of Commerce in China) and Taco van Someren (Ynnovate).

This article aims to give a summarized overview of what was discussed in the presentation of Zvi Shalgo and a grasp of topics discussed during the panel discussion. Zvi Shalgo starts his presentation by giving an overview of the current economic status. China can beviewed as a post communist emerging market with the following characteristics:

  • A privatization of markets (instead of privatization of state owned enterprises)
  • Ongoing opening of markets to increase competitiveness
  • Co-optation in enterprises (The Chinese government gives credit to both state-owned as well as private companies)

Even though the Chinese market is more open now, approaching it still has different challenges than you will find on many others. First of all, specific ‘entry fees’ are present. An example of this is that for a multinational to get foot on the ground, it needs to give up particular technology in order to get permission from the Chinese government. Besides this there is, perhaps unfair, competition by local companies supported by the Chinese government (examples of this support are a more flexible application of Chinese law and government funding for investments needed).

Despite drawbacks for international companies, the huge (and fast growing) Chinese market is still offering huge potential. Zvi shares that most multinationals neglect the lower and middle segment of the market, or in other words, are not selling to Chinese consumers but merely to the government or other companies and MNE’s. The reason for this is that most companies simply find it too demanding to manage direct selling. In this segment huge growth of local enterprises is witnessed. The entrepreneurs that are most successful (in this segment and in general) will nowadays be ‘adopted’ by the government. This means huge credit lines for investments and such. An interesting fact is that an ‘entrepreneur’ is, only since 2002, accepted as a decent person by the Communist Party. Successful entrepreneurs nowadays are viewed by the government as important ingredients for growth of the Chinese economy. The presentation continues with some examples of these very successful (and often quite young) entrepreneurs:

Name Company  Industry
Wuang Chuanfu  BYD  Autos, Mobile phone parts, batteries
Zong Qinghou & family  Suning  Household appliance, retail, property
In the Hurun list, which summarizes the 1000 richest Chinese, the number of billionaires increased from 3, only 5 years ago, to 130 today. Only one of them inherited his wealth.

When asked what (and when) mistakes are mostly made by companies interested in China, Zvi. Shalgo answers that most mistakes are made in the home country during preparation. A big mistake is the approach of many companies with the ambition of entering the Chinese market. According to Zvi the right approach is a long term vision, that includes, at least in the longer run, production in China. Simply going there to sell without monitoring closely is not advisable. Even though foreign
companies might hire Chinese agents, closely monitoring the developments of your business is a must. Furthermore, many companies that go to China have a short breath and expect to make a profit quickly. This is often not the case. Although presence on the Chinese market might be very fulfilling for a company as a whole, making a profit is often not easy.

Finally, an interesting approach of the mentality of the Chinese workforce. A standard critique is that although Chinese workers might be excellent listeners, in successful companies you also need independent thinkers. However, as Zvi Shalgo puts it: ‘You don’t need a lot of independent thinkers. If only 0,5% of the Chinese are intelligent and independent, that’s already a larger group than the population of my home country Israel!’
 
This summary is written by Harmjan Oldenbeuving, a Economics and Law student at the University of Amsterdam who is currently active in the FSA Research Project 2010 – China. A group of twenty talented master students (UvA/VU) will perform field research in China in the months July and August, tailor made for companies with activities or an interest in China. For more information on this project, please visit: www.fsaresearchproject.nl or www.fsa.nl
Tags: Untagged

How (Not) to Choose a Partner in China (Part 4 - Final)

Posted by Elena Luk'yanenko
Elena Luk'yanenko
Elena has more than five years of experience in international marketing providing services for the foreign com...
User is currently offline
on Monday, 08 February 2010
in Business in China

So, how do you choose your partner in China?

“Don’t be anybody’s first foreign client/partner in China” (Andrew Hupert, www.ChinaSolved.com)

Choosing a business partner in China is just like choosing a business partner anywhere else in the world. Don’t believe anyone who tells you that you cannot do the same kind of background check in China that you can do in other markets.

Here is a short list of things that needs to be done:

1. Reference checks are not only possible - they are a MUST. Check every company on your future partner’s CV and any foreign client he claims to have worked with. Call each one of them and don’t be shy about asking for any type of information. If you are afraid of hurting your future partner’s feelings – DON’T BE! Professionals with nothing to hide will not be offended. If he has something to hide and you don’t do a thorough background check, your feelings and pocket will be hurt badly! It is your business on the line, so don’t feel uncomfortable.

2. Check the business license of your future partner to find out if he is on any black lists of the tax bureau, banks, customs, trade office etc. If you feel that you cannot do it yourself, use professional help to do it for you. It is a worthwhile expense that might save you a lot of money and trouble in the future.

Tags: Untagged

The Top 10 China Economic Stories of 2009

Posted by Elena Luk'yanenko
Elena Luk'yanenko
Elena has more than five years of experience in international marketing providing services for the foreign com...
User is currently offline
on Monday, 01 February 2010
in Business in China

The top 10 economic stories of 2009 as selected by senior editors, media agencies and domestic economists.

1. The Chinese economy leads the recovery from the economic downturn

  • China's economy leads the economic recovery from the financial crisis worldwide, and the target of 8% GDP growth planned for this year is achievable as a result of a proactive fiscal policy, moderately loose monetary policy and extension of the economic stimulus package.
  • From January 14, the Chinese government launched a series of plans to adjust and reinvigorate key industries including autos, steel, shipping, petrochemical, textile industry, nonferrous metal, equipment manufacturing, IT and logistics. The government measures also include subsidies for autos, motorcycles, home appliances.
  • The unemployment rate was consistent below 4.6%.
Tags: Untagged

How (Not) to Choose a Partner in China (Part 3)

Posted by Elena Luk'yanenko
Elena Luk'yanenko
Elena has more than five years of experience in international marketing providing services for the foreign com...
User is currently offline
on Monday, 01 February 2010
in Business in China

The Returnee

Many foreign companies think that if they hire someone with the same passport as them and speak the same language, that this will make their life easier in China. Since sending an expat is very expensive, many times a Chinese returnee, someone who was born and/or educated overseas is hired.

Overseas companies think that the returnee has several advantages:
  • He is cheaper, especially compared to an expat with a family with a few children who all need international education, which is extremely expensive.
  • He knows the Chinese language and the culture, which help him and his family settle in much quicker than a foreigner.
  • He knows the western style of thinking and can bridge the culture difference.
  • He might be more respected by local Chinese who will appreciate his achievements.
  • He should have similar moral standards to the country he was educated in.
Unfortunately most of these assumptions are not always true. If he was educated overseas he might lack a high level of Chinese that people who went through the Chinese education system have, and local Chinese will pick up his dialect or slight foreign accent immediately. Also in many cases the locals Chinese feel that the “returnee” is looking down at them since he “made it” overseas and they didn’t. This creates antagonism and a bad atmosphere.
Tags: Untagged

Opportunities in the Chinese Market: Strategy, Tactics and Practical Tips

Posted by Elena Luk'yanenko
Elena Luk'yanenko
Elena has more than five years of experience in international marketing providing services for the foreign com...
User is currently offline
on Thursday, 28 January 2010
in Business in China

TEL AVIV, ISRAEL – This week MIT Enterprise Forum Israel held a conference for Israeli entrepreneurs, managers and professionals in Tel Aviv University to discuss business opportunities and challenges in the Chinese market.

Zvi Shalgo, Founder and CEO of PTL Group, who has been recently appointed as the Chairman of the Israel Chamber of Commerce in Shanghai, was invited  to share his personal and valuable experience of helping numerous Israeli companies to establish and manage their business presence in China for the last 14  years.

Prof. Gadi Ariav, an expert of international business management opened the seminar by saying that nowadays there is no excuse to fail when doing business overseas.  Israeli entrepreneurs and companies should learn from the experience that Israeli businessmen have accumulated over the last decade.

Mr. Shalgo stressed the point that many foreign companies don’t realize how important the process of recruiting local Chinese employees is.  Later they also fail to manage their Chinese team.  He believes that only local Chinese professionals should sell the products of the foreign companies in China.  There has to be a local control and supervision platform around the Chinese Manager, which will regulate the company's financial and logistics activities and allow the Manager to concentrate on the business development and sales activities.

Talking about the future of the Israeli export to China, Mr. Shalgo mentioned that 90% of the competition usually comes from the local companies, which have strong local government support.  In order to be competitive Israeli companies have to localize their supply chain and manufacturing.

Mr. Effi Wachtel, President and CEO of RAD Data Communications, who has been doing business in China since 1990, supported Mr. Shalgo's opinion by adding that the best way to operate in China is to set up a company that does it all: R&D, manufacturing and sales.

Prof. Ariav said that foreign companies must work in China, but most of them are just afraid.

The general consensus of all the speakers was that giving up on the Chinese market is a crucial mistake, which will be hard to correct in the future.

If you didn't have a chance to attend "Opportunities in the Chinese Market" conference, you may review its recorded version online on YouTube or on MIT Enterprise Forum Israel website.

Tags: Untagged