(Chinese version is Recorded by YANG Xiaojun, Edited by GU Dongong, Veryfied by SHEN Wei, Translated by LI Jiawei)
SHEN Wei was graduated from École nationale des ponts et chausses and he is the branch manager of BUY.O Group in China, which is originated in France, He is one of the professionals in this area, who has work in the consultancy for supply chain management and strategic cooperation between Chinese and European enterprises. SHEN Wei goes to and back from France every year for six or seven times and his schedule is full of work arrangement except for holidays. He is an earlier member of Overseas Center. Thus, to make the business culture more familiar with interested Chinese, GU Dongdong organized a second interview with him, wishing to learn more about information in this area.
I went to France and did an MBA in Université de Clermont-Ferrand 1 Auvergne after I finished my college and a two-year job in China. Then I was admitted to École nationale des ponts et chaussées in 2005 and majored in Logistics System Engineering. Logistics Management was popular at that time because I thought when we chose a major we should consider our future career.
After several rounds of interview I was lucky enough to be the first Chinese admitted by the major in eight years in France. The major was cooperated with Ecole Polytechnique Fédérale de Lausanne, where courses were taught in English while in École nationale des ponts et chaussées, French. I was intended to do something concerned with supply chain and find a job in France at the very first so naturally I chose the French program.
I had lots of choices when I graduated. Considering the fact that it would be difficult to get a post-lifting if I went to a fortune 500 company to do procurement supplier chain because there were many Chinese people working there and the competition would be quite fierce, I chose to work in a consultancy where many of our clients were members of fortune 500. I’ve been quite familiar with their procurement process after so many years. Believe it or not, one year in a consultancy equals four or five years in ordinary ones because you can learn much more in the former situation. I really made a great effort and the first undergraduate major of procurement management in China was finally opened in Beijing Wuzi University.
With the development of the company, our consultative system has changed gradually. We now focus on consultation on integration of resources out of enterprises, including the establishment of relations between suppliers and cooperative partners and the derived merger and restructuring; as the amount of programs increases day by day, the three parts of business are finalized.
At present, domestic enterprises reform not enough about procurement, the target clients of procurement business are mainly branches of foreign capital corporations. Procurement is actually an important link in an enterprise, if the cost declines by 1%, the profit may improve 8% to 10%. To achieve this, the procurement should start from design, which means designing with suppliers. Besides, cooperate with engineers. A good example is that if the metal part of accessories could be replaced by plastic without affecting its function, then the cost of procurement would be cut a lot and the profit would be higher.
As for the business of establishing cooperative partners, at first it was foreign enterprises that came to China to look for cooperation but slowly more domestic enterprises begin to seize the initiative. They go abroad to find technical supplements which accelerate the process of research and development or to purchase enterprise in the same industry and make it the foreign research and development team of its own. In addition, the acquisition of brand and sales channel is also a key point of Chinese enterprises’ overseas development.
The reason why some integration between enterprises failed is actually because different cultures cannot communicate well enough. If European businessmen come to China, the way they would be treated is a little like what a nanny would do to a baby because in most cases their Chinese partner has arranged lots of activities for them except for meetings, such as eating local food, doing some sightseeing and so on. On the contrast, when Chinese businessmen go to Europe, the European partner would never do the same. They hold the view that if a meeting is over at 12, then after that you Chinese friends can do anything as you like. The European seldom set a feast for their partner. Some Chinese employees who are embarrassed about this tend to invite their Chinese clients to have a good meal with their own money. Why? In European, people don’t want to be disturbed after work because that is their personal time, which explains their behavior. The foreign business rules are more formal and people there are not willing to give extra money. I have another example here which obviously shows the difference between Chinese and European culture. Some Chinese managers go to Europe and ask their French partner to invite dozens of pretty French female colleagues to have a delicious meal together. However, the French does not understand what they mean and is at a loss.
I often deal with various entrepreneurs under different culture backgrounds. Some things seem easy while to do it is not. To promote the cooperation between Chinese and French enterprises I have tried almost every method to make it happen that French entrepreneurs sacrifice their personal time to communicate with Chinese partners. This can never be too common in China but in France it is really not a piece of cake. I still remember the first successful case. With both sides satisfied with each other’s hardware facilities, I told my French boss to rent a cool car, arranged a staff member to do the driving job to meet our Chinese partner at the airport and keep company during the whole journey. When the Chinese enterprises were about to leave, we sent them local French presents. These common “what people often think and do”
In China, if you ask French people to do as us, then I think only those who have quite a lot of western friends can understand deeply how hard it is. So, the consultancy we work in may seem very simple for some people, but except for excellent basic knowledge, these problems are all challenges we have to face.
It requires professional managers who have international management experience to operate the acquisition of foreign enterprises or to start an international market. But Chinese entrepreneurs tend to be thrift so they do not want to hire experienced international manager. Sometimes they would rather ask an intern. And if it turns out that the intern do it quite well and help improve the profit, they will hire him/her.(The content undermentioned is added by GU Dongong: Haigui(The word in Chinese means people who have experience of studying abroad and come back to China) in Xiaoshan cooperate with local enterprises quite well. The occurrence of the so-called “wisdom plus capital” is because of some former successful examples, which make the similar cooperation later more smoothly. Though entrepreneurs in Xiaoshan may not have high education level, but they seem to have the ability to choose the right people. Overseas education background and if the man is also reliable, then those entrepreneurs just invest. This is often more workable and accurate than those who do several rounds of research.)
Foreign bands will seek for Chinese partner if they want to enter Chinese market, such Gucci, who introduces Chinese agents. But it saw the huge potential of Chinese market so it recalled its agency in China. As a result, it is not attractive anymore to be agents for foreign bands now, many enterprises would choose to buy shares of them.
Most middle- and small-sized private enterprises in France need powerful Chinese partners if they want to develop more strongly in China. After all, these kind of enterprises do not know China thoroughly enough and dare not dash in to the Chinese market, so it is the best way to find a proper Chinese enterprise and to be its partner. What’s more, the biggest shareholders of these French enterprises are fund companies instead of their own family. Generally speaking, fund companies are willing to transfer parts of their shares under the guide belief that capital runs for profit. But it is necessary that the development strategy of the Chinese enterprise should consistent with the French side. If not, the cooperation would break up easily.
It’s the character and quality of manager that many mergers attach great importance with. Take a latest program for example, the manager of the French enterprise was an engineer before and is a rigorous man. So finally, the Chinese side did not investigate the French enterprise fully and thoroughly but just analyzed the financial data before making the decision.
Traditional French Industries including clothing and cosmetics are the main targets of acquisition from Chinese enterprises. Some international brands which are admired too much would even meet with undesirable acquisition. The recent Prada program is a typical example for this.
Some European brands want to produce in China and to develop Chinese market in the meantime. As a consequence, they hope to find Chinese partners who are able to and willing to invest in them. If more than 50% orders are transferred to the Chinese side, the procurement may get into the danger of being controlled. If there were some problems with the producing progress of Chinese partner, which caused more trouble in other aspects such as the deal time and the product quality, the European side would face huge commercial risk. However, these French enterprises are often middle-sized and small-sized with 200 to 300 staff members. They have no agency in China, neither do they want to take part in the management of suppliers. Under the circumstances, they would choose to transfer the procurement progress to China. Big enterprises tend to set agencies in China. These agencies are responsible for procurement and they would evaluate, assess and supervise their suppliers.
Many French enterprises want to cooperate with Chinese ones but they do not know enough about China. Sometimes they even feel afraid. French people they themselves have some differences between southern and northern parts. Hundreds kilometers of distance geographically can give birth to totally different characters. Northern French people appear proof which is slightly like the Germans. It was mining area there in the past and now it isn’t. Most French people consider them very poor. Meanwhile, southern Frenchmen are more flexible and good at business so that you feel it easier to cooperate with them. But once northern Frenchmen trust a person, they may be lifelong friends with him. While southern French cannot do the same. They are easygoing and are good business partners. Inviting you to their house and sending you local red wine are also what they often do. Actually northern Frenchmen are really sincere. Maybe it is because they have no other activities except for gathering together and chatting with each other in those cold days. In the south, the weather is hot and people just walk around. You’d better not trust more than one sentence from the ten which People in Marseille say in case of that they are used to exaggerated language.
February 11th, 2012, Hangzhou