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Focus on China

Fujitsu Siemens. Internationalization Strategy. Focus on China. Name : Richard Erb Education : Diploma in Biology minor subject Chemistry Age : 55 years Business : 2 years software development

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Focus on China

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  1. Fujitsu Siemens Internationalization Strategy Focus on China

  2. Name : Richard Erb Education : Diploma in Biology minor subject Chemistry Age : 55 years Business : 2 years software development experience : 14 years sales and marketing 4 years purchasing Actual position : Managing Director Fujitsu-Siemens Taiwan and China Since 1992 in Asia (Singapore, Tokyo, Beijing, Hongkong, Taipei, Suzhou)

  3. 1. About China • 2. Fujitsu-Siemens in Greater China

  4. 1. About China • 2. Fujitsu-Siemens in Greater China

  5. Perception and facts • Cultureshock China • China the supplier • China the customer • China the competitor • China the partner

  6. Perception and facts • Cultureshock China • China the supplier • China the customer • China the competitor • China the partner

  7. Large Yellow Underdeveloped ?

  8. 3400 KM 1000 KM 4450 KM 1600 KM 1200 KM Perception and facts

  9. Perception and facts 45.800.000 internet users 310.450.000 fixed line phones 320.240.000 mobile phones 410.000.000 TV sets 457.000.000 Radios 170.000.000.000 SMS

  10. Perception and facts

  11. Chongqing 30 Mio (15 Mio central city) Chongqing 30 Mio (15 Mio central city) Shanghai 20 Mio (13 Mio central city) Beijing 12 Mio Chengdu 10 Mio Chengdu 10 Mio Harbin 9 Mio Tianjin 9 Mio Wuhan 7 Mio Qingdao 7 Mio Perception and facts

  12. Perception and facts • Cultureshock China • China the supplier • China the customer • China the competitor • China the partner

  13. Perception and facts • Cultureshock China • China the supplier • China the customer • China the competitor • China the partner

  14. CultureshockChina Language 400 sounds * 4 tones = 1.600 sounds 56.000 characters / 1.600 sounds = average 35 meanings per sound

  15. CultureshockChina Relationship Relationship in China is much more important than in Germany. People usually know schoolmates from different classes

  16. grandmother grandfather grandmother grandfather mother‘s brother = uncle mother‘s sister = aunt father‘s brother = uncle father‘s sister = aunt mother father aunt uncle aunt uncle nephew nephew nephew nephew nice nice nice nice nephew nephew nephew nephew nice nice nice nice CultureshockChina Family Relationship Germany me

  17. 外婆 外公 奶奶 爺爺 grandmother grandfather grandmother grandfather wai gong nai nai yie yie wai po mother‘s brother = jio fu mother‘s sister = ai yi father‘s older brother = buo buo father‘s sister = gu gu 媽媽 爸爸 阿姨 舅父 伯伯 姑姑 mother father 舅媽 姨丈 伯母 嬸嬸 姑丈 buo mu shen shen gu jang jio ma yi jang biaoge biao ge tang ge me tang jie tang ge biao ge tang jie biao jie biao jie biao jie 表姊 堂哥 堂姐 表哥 表姊 表哥 堂哥 堂姐 表哥 表姊 biao di biao di tang di biao di tang di biao mei biao mei tang mei tang mei biao mei 表弟 堂弟 堂妹 表弟 表妹 表弟 表妹 堂弟 堂妹 表妹 CultureshockChina Family Relationship China father‘s younger brother = shu shu 叔叔

  18. CultureshockChina Relationship Relationship in China is much more important than in Germany Each family relation has its own name People usually know schoolmates from different classes Business in China is done based on relationship Contracts may support the business, but are not mandatory Business in Europe is done based on contracts Relationship may support the business, but are not mandatory Mistrust between people without established relationship is not necessarily impolite No business without lunch or dinner

  19. CultureshockChina Behaviour Example: Negotiations about future business partnership In western countries it is not unusual to give a leap of faith to the future business partner. This behaviour is based on the assumption, that the future partner will follow the agreed contractual terms and conditions In China it is not unusual to start with a lack of trust to the future business partner. This behaviour is based on the fact, that contractual terms and conditions can not always be enforced Sleeping in the same bed, but dreaming different dreams This can lead to a situation, where the western partner shows his trust and the chinese partner shows his mistrust. The western part is concerned, because the future partner shows openly a lack of trust. The Chinese partner is concerned, because the western partner is so naïve to trust someone he does not yet know. Both behave different, however, both are right from their personal point of view

  20. CultureshockChina Behaviour a “YES” must not necessarily mean “YES”

  21. CultureshockChina Business opportunities Examples for business difficulties based on cultural differences Karaoke systems in Germany Tanning salon in China Advertisement

  22. CultureshockChina Why can’t they behave like us ? Why should they ?

  23. Perception and facts • Cultureshock China • China the supplier • China the customer • China the competitor • China the partner

  24. Perception and facts • Cultureshock China • China the supplier • China the customer • China the competitor • China the partner

  25. China the supplier In 2004, Germany imported products from China at a value of 25 bln Euro (+ 17,3%) If China does not ship, German shops are empty The majority was represented by products of the IT industry, clothing (textile as well as leather goods) and household appliances

  26. China the supplier Most probably, all of you here in the audience have something which was produced in China

  27. China the supplier 35% of all microwave ovens are produced by Galanz in Shenzen 35% of all mobile phones are produced in China 40% of all harddisc drives, scanners, and PC housing are produced in China (Shanghai, Suzhou, Wujiang, Kunshan, Shunde, Dongguan) 50% of all shoes are produced in China 55% of all digital cameras are produced in China 60% of all bicycles are produced in China 70% of all notebooks are produced in Taiwanese factories in China 70% of all toys are produced in China 75% of all photocopiers are produced in Dongguan 80% of all PC motherboards are produced in Taiwanese factories in China 80% of all DVD players are produced in China

  28. Perception and facts • Cultureshock China • China the supplier • China the customer • China the competitor • China the partner

  29. Perception and facts • Cultureshock China • China the supplier • China the customer • China the competitor • China the partner

  30. China the customer In 2004, Germany exported products to China at a value of 18,2 bln Euro (+ 24,9%) The majority was represented by machinery and complete industrial facilities, specialized technical equipment and cars.

  31. Diamonds 2003: 1.5 bln US$ revenue (+ 8 %) Body care 2003: 5.5 bln US$ revenue (+ 25 %) Tourism to Germany Jan. – Jun. 2004: 344.000 people (+ 48 %) average spending per person and day: 200 Euro Expectation for 2010: 1 mio tourists p.a. China the customer ~ 100 mio people earn more than 5.000 US$ per year ~ 40 mio people earn more than 25.000 US$ per year ~ 300K people earn more than 1.000.000 US$ per year Swiss luxury watches 2003: 150 mio US$ revenue (+ 15%)

  32. Perception and facts • Cultureshock China • China the supplier • China the customer • China the competitor • China the partner

  33. Perception and facts • Cultureshock China • China the supplier • China the customer • China the competitor • China the partner

  34. China the competitor China is a major competitor in - Demand for raw materials - Demand for investment money - Supply of cheap labor

  35. China the competitor Raw material Stannous : Price increase from < 4 US$ / kg to 9 US$ / kg within 2 years (Zinn) Copper : Price increase of 70% within one year (cabling, electronics) (Kupferl) Lead : Price increase of 65% within one year (car batteries) (Blei) Nickel : Price increase of 40% within one year (steel coating) Coke : Price increase of 500% within two years (steel production) (Koks)

  36. Raw material consumption in % of world consumption 2003 China US EU Japan Coal 31,3 22,3 8,6 4,4 Steel 26,0 11,6 16,2 8,5 Oil 8,0 25,1 17,6 6,8 China the competitor Raw material In the first 6 months of 2004, the consumption of mineral oil and steel grew by 50% In 2004, China consumes: - 50% of worldwide cement production - 25% of worldwide copper - 33% of worldwide steel production

  37. China the competitor Raw material

  38. China the competitor Investment FDI CI 2003 * 2004 2003 2002 1 1 1 China 2 2 2 USA 3 6 15 India 4 7 3 Great Britain 5 5 4 Germany 6 11 5 France 7 19 10 Australia 8 22 18 Hong Kong 9 12 6 Italy 10 15 12 Japan * (Foreign Direct Investment Confidence Index A.T.Kearney)

  39. China the competitor Investment

  40. China the competitor Investment

  41. China the competitor Labor cost

  42. China the competitor Labor cost

  43. Perception and facts • Cultureshock China • China the supplier • China the customer • China the competitor • China the partner

  44. Perception and facts • Cultureshock China • China the supplier • China the customer • China the competitor • China the partner

  45. In 1998, a German consortium won the contract to built the first commercially used highspeed magnetic train from Shanghai Pudong airport to the city. In 2003 we can see the first test train, completey developed and produced in a cooperation of Chinese companies and universities. Partner China Part of the deal was the involvement of chinese companies and a reasonable know how transfer

  46. Partner China The Yangtse River Dam Project saves annually 2 million tons of sulfur dioxide 100 million tons of carbon dioxide Power generation equivalent to 14 nuclear power stations or 22 coal-fired power stations. Compared to power generation with conventional coal-fired power stations, the Yangtse river power generation saves annually 40 million tons of coal for China

  47. In the early nineties, a German consortium won the contract to built 8 power generators (each 700 MWatt for the Yangtse river project. Partner China Part of the deal was the involvement of chinese companies and a reasonable know how transfer to enable them to built the other 16 generators. In the late nineties, China was able to offer large power generators to a project in Iran.

  48. Partner China What does China need ? - know how in managent and controlling - know how in marketing • technical know how in special areas • (ex. server computer)

  49. Investments into our future „Germany is China’s largest European investor, between 1990 and 2003 German companies have done direct investments in an amount of 9 billion Euro” (German president Koehler in Wirtschaftswoche Special Edition Nr. 1, 30.09.2004)

  50. Investments into our future

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