Boots on the Ground

NHO and Dansk In­dus­tri Asia Base tied up an agree­ment dur­ing the Nor­way-Asia Busi­ness Sum­mit 2019 that pro­vides com­pa­nies from Nor­way with ac­cess to a Chi­nese en­try ser­vice.

Norway-Asia Business Review - - F OREWORD - CHEYENNE HOLLIS

One of the big­gest chal­lenges fac­ing Nor­we­gian com­pa­nies want­ing to en­ter China is get­ting started. The mar­ket is brim­ming with po­ten­tial, but the road to re­al­is­ing it re­quires busi­nesses to nav­i­gate early dif­fi­cul­ties that can quickly de­rail the en­tire process.

“It is rather chal­leng­ing for com­pa­nies who try to en­ter China on their own. Even big firms with lots of re­sources aren’t al­ways able to suc­cess­fully de­ploy. The is­sues are re­ally multi-level,” Mr Tore Myhre, NHO In­ter­na­tional Di­rec­tor, said. “You have ad­min­is­tra­tive pro­ce­dures, such as reg­is­ter­ing a busi­ness, that aren’t sim­ple. Then you have re­cruit­ing chal­lenges. There are lots of prac­ti­cal chal­lenges and the process can be costly. And if you don’t do it cor­rectly, you could in­cur de­lays which lead to even more costs.”

With more and more com­pa­nies digi­tis­ing how they op­er­ate, there is a big

temp­ta­tion to move into China with­out any phys­i­cal pres­ence. And while this may work in other mar­kets, Mr Myhre is of the opin­ion that main­land suc­cess re­quires a com­mit­ment that goes beyond digital.

“Hav­ing a phys­i­cal pres­ence is a def­i­nite ad­van­tage in or­der to be taken se­ri­ously by the lo­cal mar­ket. It shows your long-term com­mit­ment. Hav­ing a pres­ence in China is re­ally the first ob­sta­cle you must over­come when en­ter­ing the coun­try,” Mr Myhre stated.

It is that un­der­stand­ing of the mar­ket that led to NHO sign­ing an agree­ment with DI Asia Base that will pro­vide Nor­we­gian com­pa­nies with ac­cess to the Dan­ish or­gan­i­sa­tion’s China en­try ser­vices.

“When I first heard about the idea, I thought it was fas­ci­nat­ing. The NHO lead­ers were very sup­port­ive about the col­lab­o­ra­tion and we had their back­ing since day one. It is some­thing we’re very ex­cited to launch,” Mr Myhre pro­claimed “DI Asia Base is our sis­ter or­gan­i­sa­tion and we are ob­vi­ously quite sure of their qual­ity. We know this pro­gram works as DI Asia Base has been do­ing for more than 15 years and has had many suc­cess sto­ries. We have also vis­ited the of­fices and had meet­ings with the team from DI Asia Base.”

Mr Glen Mikkelsen, DI Asia Base Man­ag­ing Di­rec­tor, ex­plained that Nor­we­gian firms have ac­cess to two dis­tinct ser­vices the com­pany pro­vides.

“The first ser­vice is to hire staff through us to get ‘boots on the ground’ in the Chi­nese mar­ket with­out hav­ing to spend time and tie up cap­i­tal in a com­pany reg­is­tra­tion. This pre­reg­is­tra­tion ser­vice can be started with a few days’ no­tice if the com­pany has a can­di­date they’d like us to hire. Oth­er­wise, it usu­ally takes two to three months in

or­der for use to go through the re­cruit­ing process and hire staff,” Mr Mikkelsen said. “The other ser­vice we pro­vide is Out­sourced Ad­min­is­tra­tion, which is where we as­sume the man­age­ment of a client’s sub­sidiary in China. That is to say every­thing to do with Fi­nance, HR, tax and things of that na­ture.”

When it comes to the hir­ing of lo­cal staff, busi­nesses will have the fi­nal de­ci­sion and are free to lean on DI Asia Base to over­see the re­cruit­ment or use a head-hunt­ing agency.

“Clients ap­prove the can­di­dates that are se­lected and they them­selves come out for the fi­nal round of in­ter­views with the fi­nal can­di­date field,” Mr Mikkelsen noted. “We can­not guar­an­tee that com­pa­nies make a good choice or that we find only amaz­ing can­di­dates. Re­cruit­ment is far from an ex­act sci­ence af­ter all. But we do have a very good track record over the past 15 years and very high staff re­ten­tion com­pared to the norm in China.”

Keys to a suc­cess­ful en­trance

DI Asia Base be­gan its China en­try ser­vice in 2004 and ap­prox­i­mately 110 com­pa­nies have come through the pro­gram since then. Mr Mikkelsen re­ported that some par­tic­i­pants end up form­ing stand­alone op­er­a­tions in China once they reach a cer­tain level while oth­ers stay with the pro­gram as they don’t re­quire more than what’s pro­vided.

“The pro­gram could re­ally work for com­pa­nies in any in­dus­try. It is sec­tor ag­nos­tic. Even big com­pa­nies have used the ser­vice since it allows them to have that first pres­ence where they can scale up ac­cord­ingly. It is the medi­um­sized com­pa­nies that ben­e­fit the most from the pro­gram, how­ever,” Mr Myhre pointed out. “It could also be in­ter­est­ing to smaller en­ter­prises, espe­cially those in­volved in tech­nol­ogy. Ul­ti­mately, com­pa­nies need to have a cer­tain level of com­mit­ment and ma­tu­rity to en­ter the Chi­nese mar­ket so that is some­thing to fac­tor into the de­ci­sion.”

Mr Myhre be­lieves busi­nesses must be pre­pared be­fore en­ter­ing China. This in­cludes do­ing all the necessary home­work and hav­ing a deep un­der­stand­ing of the sit­u­a­tion in re­gards to busi­ness. From there, the key is to find trust­wor­thy part­ners who un­der­stand both sides of the cul­ture and can make life eas­ier, both of which the DI Asia Base en­try ser­vice can as­sist with.

“By join­ing the pro­gram, com­pa­nies are able to focus on busi­ness de­vel­op­ment and strat­egy instead of dayto-day tasks. Build­ing the busi­ness and fo­cus­ing on why you want to be in China, as op­posed to the how, has a great deal of value, both in terms of time and fi­nan­cial costs,” Mr Myhre noted.

Ac­cord­ing to Mr Mikkelsen, most of DI Asia Base’s 50 cur­rent clients focus mostly on the busi­ness de­vel­op­ment/ sales as­pect of op­er­a­tions since they are tak­ing care of vir­tu­ally all other prac­ti­cal­i­ties.

“The im­por­tant thing for clients start­ing out in China is to have ca­pa­ble, de­pend­able lo­cal staff who truly un­der­stands the lo­cal mar­ket and who feel at ease with hav­ing them rep­re­sent the com­pany,” Mr Mikkelsen said. “In or­der to have suc­cess here, you need to be rep­re­sented in the mar­ket and gen­uinely know what is go­ing on. We pro­vide that se­cu­rity and en­vi­ron­ment in which such staff can thrive and you can feel at ease that there are de­pend­able con­trol mech­a­nisms in place as well as some mea­sure of over­sight.”

Un­der­stand­ing the lo­cal mar­ket and be­ing able to see the sit­u­a­tion in real time is also some­thing Mr Myhre found to be a key to suc­cess.

“Things can change very quickly here. And the only way to un­der­stand and iden­tify this change is to be here. The digital trans­for­ma­tion is quick and hav­ing the pres­ence in China means it won’t pass you by. You can see first hand how and why the change hap­pened and de­velop a so­lu­tion that fits,” Mr Myhre stated. “Nor­we­gian com­pa­nies must un­der­stand the lo­cal sit­u­a­tion and know the mar­ket since po­ten­tial clients will value this. Hav­ing an un­der­stand­ing of the sit­u­a­tion can also help build trust be­tween a for­eign busi­ness and the lo­cal mar­ket.”

The right time

While China is a no­to­ri­ously dif­fi­cult mar­ket to en­ter, now may be as good of a time as any for Nor­we­gian com­pa­nies to make their move. Ac­cord­ing to Mr Myhre, as long as they un­der­stand the dy­nam­ics of the mar­ket and can get boots on the ground, busi­nesses from Nor­way are in a good position to suc­ceed.

“There are great op­por­tu­ni­ties in China and there is a great in­ter­est around Nor­we­gian busi­nesses. This came af­ter the two high level vis­its to China, one by the Royal Cou­ple and one by the Prime Min­is­ter, where there was a record­high num­ber of Nor­we­gian com­pa­nies in­volved,” Mr Myhre ex­plained. “A free trade agree­ment be­tween Nor­way and China would help cre­ate an even more pos­i­tive en­vi­ron­ment for fu­ture col­lab­o­ra­tion. “

Ad­di­tion­ally, several Nor­we­gian sec­tors are strate­gi­cally poised to as­sist China in its fu­ture de­vel­op­ment.

“Nor­we­gian sec­tors are very com­pat­i­ble with the needs of China. There is lots of tech­nol­ogy and knowl­edge we can de­liver to China’s value chain,” Mr Myhre re­ported. “There are also prod­ucts and ser­vices that Nor­we­gian com­pa­nies have which are a high-pri­or­ity for Chi­nese de­vel­op­ment. This is a win­win sce­nario where both sides can re­ally ben­e­fit.”

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