Business / Economy

Take time to look at new situation before entering China

By CHEN YINGQUN (China Daily) Updated: 2015-05-04 10:41

The motto of Massimo Bagnasco's architectural business is "Less ego, more eco", reflecting its focus on integrated design that pays full heed to environmental concerns. That ethos now seems particularly apt for a company with a presence in China, where business traits once regarded as a must-big and getting bigger, growing rapidly and growing more rapidly still-suddenly seem to be passe.

So much so that as many multinational companies shut down factories in the country or reduce investment, smaller, more resilient companies and business people like Bagnasco are beginning to find that their best days in China may lie ahead.

After 12 years in China generally enjoying success that paralleled the spectacular growth of the host country's economy, Bagnasco's company Progetto CMR, whose headquarters is in Milan, went through a rough patch in 2013, he says.

Making the most of its circumstances, the company "took time to look at the new situation in China and what could be new areas to develop, and we got a clear idea of how to develop our business", he says.

One realization was that Progetto CMR's concept of integrated sustainable urban planning and green building was at last beginning to take off in China.

That reassessment of a company's relationship with China reflects the process much of the world is now going through as it grapples with the idea of how to deal with the country's so-called economic new normal.

China has been a preoccupation with businesspeople, economists and politicians worldwide for several years now as its GDP growth has headed seemingly inexorably below 7 percent. However, many experts regard an economy that is more consumption-driven, service-oriented and that focuses on high-technology and innovation as one that produces more opportunities for European small and medium-sized enterprises.

Mats Harborn, vice-president of the European Union Chamber of Commerce, says: "In the past, the Chinese government cared a lot about quick growth, and being big in different areas.

"Now the country is moving into a new economic phase, with the focus on moving up the value chain and thinking about what kind of value can be optimized."

This "business logic" is something that Europeans can readily recognize, he says, because it is much closer to the European way of doing business.

"Now it is not about low cost, but about value. So there are millions of opportunities for European small and medium-sized enterprises."

Harborn estimates that Europe's small and medium-sized enterprises account for about 99 percent of European businesses. They play a pivotal role in the creation of wealth and economic growth, and are important drivers of innovation.

The European chamber says it represents about 1,800 companies in China, 80 percent of them SMEs. China is now Europe's second-largest business partner, and Europe is China's biggest business partners. Every day, bilateral trade between China and Europe exceeds 1 billion euros, Harborn said.

Companies like Progetto CMR now say that winds of change in China, hopefully soon, will breathe new life into their business. Bagnasco points to what he sees as huge opportunities in the National New-type Urbanization Plan (2014-20), the country's first official plan on urbanization. The plan, published last year, lays great stress on environmental issues and quality as urbanization proceeds.

In the past in China, quantity and speed rather than quality and design added-value were the chief concern of most stockholders embarking on a construction project, Bagnasco said.

"When they saw a design they would say, 'Maybe this is too expensive, and it's going to take too much time,' and then keep maybe 10 percent of your design, but build in another way, because they had to build quickly.

"We welcome the new plan for urbanization, because it completely changes the approach toward city development. The focus used to be on speed and quantity. Now we really expect it will be different. People see the value of the experience, and the management of the project development process we are able to do is different.

"They are now focusing on something that has social importance, and on people, realizing that you should provide new services to people, you should provide healthcare, education and should also take into consideration culture, historical heritage environment protection, natural resource preservation, starting by a sensible improvement in land use efficiency."

Therein lie huge opportunities for European companies, he said.

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