Danish group mopping up competition with M

ISS China makes mark in the services industry by understanding Chinese market

Mergers and acquisitions are major challenges to almost every business, especially in a foreign market. For the Danish facility services company ISS Group, which acquired more than 500 companies in seven years beginning in 2000, however, acquisitions are apparently the best way to expand.

That is why the services giant, which employs about 530,000 people worldwide, has grown to more than 13,000 in China in those seven years.

Jack Zhou, manager of ISS China, says the company can have more insights into the Chinese market through mergers and acquisitions. [Provided to China Daily]

ISS China, a subsidiary of Copenhagen-based ISS A/S, the world's fourth largest private employer, grew by 31 percent to about 500 million yuan ($78.9 million, 60 million euros) last year in terms of revenue.

The Copenhagen-based group, which receives financial advice from EQT Partners and Goldman Sachs Capital Partners, grew by 6.2 percent to 77.6 billion Danish kroner ($13.6 billion, 10.4 billion euros) last year, according to its financial report released March 5.

"In China, facility maintenance services are seeing an expanding market, and it is an open market that everyone may join to compete. The key to success is to bring services of excellence and higher quality," says Jack Zhou, manager of ISS China.

Getting the right people and customers through acquisitions is the ISS way in China and Zhou is a perfect example.

Zhou, a former factory floor manager at a textile manufacturer and a former marketing manager with a janitor service agency, established his own cleaning services company called Hong Run Cleaning Co in Shanghai in 1998.

By 2004, the company had 6,000 employees with sales of 70 million yuan.

It was sold to ISS A/S and became ISS China one year later for an undisclosed amount of money.

Today, ISS China is a leader in facility management and a services provider in cleaning, support, property, catering and security, with operations in more than 90 cities in China.

Trust in the local team has been ISS China's key to manage uncertainties in the transition after acquisitions.

Zhou and his team all remained with the company after the acquisition. When it was expanding, ISS fully supported the local employees because as a facility services company, the company realized it must understand the local market.

International employees such as ISS China's Danish director Peter Trampe, who has unique and extensive knowledge of the Chinese culture and is proficient in Mandarin, have helped the company immensely in bridging the gap between the European and Chinese thought processes and their different ways of doing business.

Zhou says a large part of ISS China's growth is based on continuous exploration and acquisition on the ISS Hong Run platform. The company says it holds an open mind and is looking for suitable opportunities for mergers and acquisitions.

"We hope that through acquisitions and mergers, we will have more insights into China's market and clients' needs, and develop our own services and enhance service quality," says 48-year-old Zhou, who holds a master's degree in business administration from China Europe International Business School in Shanghai.

Although ISS Group is a world-renowned facility management and maintenance services provider with expertise around the world, it was quite new in China when it entered the market in 2000. There were challenges; competition was fierce and the cost for human resources was skyrocketing.

"China is an emerging and constantly growing market. We need to build up our brands here with a focus on services," Zhou says.

ISS China started with acquiring overseas-invested companies in large cities such as Beijing, Shanghai and Guangzhou. At the same time, ISS China eyed developing new customers for M&As.

"There isn't such a service that can be only done by ISS China - the market is open and every service provider has its share if it works right. However, we do things differently by providing services of higher quality," Zhou says.

Professional maintenance services focus on precise solutions, he says. Take window cleaning as an example. Mirror glass, double-glazed glass and plain glass require various cleaning facilities, he says.

"Domestic clients are attaching importance to the professional level to maintenance services, which gave us opportunities to stand out," Zhou says.

Today ISS China is a very important part of ISS' global success.

"Economic development brings more awareness and more importance attached to quality services, especially facility management. When we began the services, most of our clients were foreign companies and luxury stores. But now we see increasing accounts of domestic companies that are interested in service packages," Zhou says.

Zhou says he is optimistic about the company's ability to sustain growth at a pace that doubles turnover every two or three years.

ISS is widely recognized in China as a respected global company with a loyal customer base of several large Western multinationals and the largest Chinese airports. The Danish Embassy is predicting high growth opportunities for ISS in the Chinese market based on its increased focus on service.

On March 2, Zhou was awarded the Diploma of the Danish Export Association and His Royal Highness Prince Henrik's Medal of Honour presented by Denmark's Prince Henrik for the company's success in China and in promoting economic cooperation between the two countries.

"When we think of services, we think of feelings. Services are not like products that you can touch and see, but customers can feel the quality of the services in every detail, and they can see the attitude behind the services," Zhou says.

He says he has his eyes on potential customers from a wide range of industries across a wider geographical area.

"We have observed that manufacturing is shifting to the western part of the country and the pan-Bohai Sea region, and we see rising demand for outsourcing services ranging from janitors to caterings, so there is still a large space for us to develop," Zhou says.

Last year, the company signed an agreement with Daduhe district government in Chongqing, a destination for international investors, to invest 2 billion yuan until 2020.

At ISS China, employees are trained to be professional and highly skillful. An employee may enter the company with entry-level skills, but will eventually develop more skills through years of working with various teams, Zhou says.

"We encourage staff to learn for themselves and to provide better services because this is the way to self-development for individuals and for a team."

ISS China recognizes that human resources are one of the most important assets for ISS China and the company values employees' potentials and ideas, he says.

"We rely on people because they deliver quality services. We believe that if we work together, we do better and we can present better performance with higher efficiency as experience accumulates."

wuyiyao@chinadaily.com.cn