(If interested, please see elsewhere on the ISO website for the full report of the ISO 2005 Tour).

  

The group.

We were 14 participants meeting at the first class Central Hotel Shanghai Sunday evening 13^th June for a briefing of the business & study week to come.

 

Some of us had been to China before.

Personally I had visited twice. First time in 2004 with an official Danish delegation of 12 members of the Danish Federation of SME to Guangzhou, Zhenzen, Shanghai, Ningbo and Beijing (See NASFM Magazine Vol. 7, no.2, April/May 2004). Second time in 2005 with the ISO tour of 23 Europeans, looking for sourcing and business opportunities in Shanghai and at the CRC Expo trade fair, so I felt – if not “professional” – at least prepared.

But I got wiser. And have I not told the members over and over again, that is what it is all about in ISO?  Getting wiser? And I am sure we all did. 8 Americans and 5 Europeans including the organising China Consult CEO (and DDI, Danish Shopfitting Association president) Hans Jorgen Dalum, plus fortunately, one Chinese, Lynn, who is also managing director in daily charge of CC’s metal manufacturing plant in Hefei, a 4.5 mil. city approx. an hour flight to the West of Shanghai.

 

Now another fortunate coincidence was the participation of Tracy Dillon, NASFM Magazine editor.

She is not only a wonderful, dedicated and competent person, she has also undertaken the task of reporting to the members, what we did, saw and learned during our visit to the Shanghai Region.

Which allows me to write only about the differences I noted compared to 2 and 3 years ago, as well as my personal observations during the week.

 

Monday – Wednesday, factory and business visits.

Everybody onboard, the bus left (and more unexpected) arrived on time, first visit being to Kailiou

Shopping Carts, the same as in 2005. Because I’d been there before, I had been very close to engage in other business that morning, but Hans Jorgen convinced me to come along, and thanks for that. My comments 2 years ago were: “ a lot of hand work, cutting, bending, grinding (sitting on the floor), welding (no exhaust system) etc. The finished product seemed of an acceptable quality and the price estimates attractive, but in my opinion the company must invest their earnings in upgrading of their manufacturing facilities, or they will be overrun by competition shortly.”

And that is exactly what they did! They had not only invested, they had expanded tremendously, and further increased capacity, and quality! It was almost scary, when we think of the (lack of) Western investment rates. Larger, more modern, much higher quality, better designs etc.

 

And they are not alone. This was more or less the rule in the rest of the factories, we visited. Tremendous growth, heavily investment and improvement programs, in productivity, quality, design. But considering the growth of the home market, the incredible modernization of the whole Chinese retail sector, it’s not so frightening, as you might think at first sight. Two years ago, I also observed: 

“The simple answer is that direct competition is not the biggest threat, yet! A combination of the sophisticated, highly developed "European" product, manufactured (sourced) from the modern, low cost, volume factories of China is probably the winning concept?”

 

The Western shopfitters should concentrate on “shopfitting” i.e. customer service in designing, managing, supplying the whole project, the complete store, and of course sourcing (nothing new I that except the word itself) from the best sub-suppliers, at the most attractive terms.

The shopfitting business is local in the sense, that the business is where the customer is! You can do a lot via the internet, even in our industry, but not a shopfitting! Think about that.

 

It’s a small World.

Knowing very well, I am repeating myself, Shanghai is more the New York of Asia, than what anybody would expect from a Chinese City, and constructions are still going on at full speed, preparing for the World Expo 2010. So it was really a little surprise to meet my old friend Walther from Italy there!

 

First time I met him, we were exhibiting shop equipment together in Copenhagen Bella Center, it must have been in 1990/91 or so? He had just invented a new design of tube-connectors, and my Danish company was manufacturing (and trading Italian) fixtures and fittings, including tube and connectors! We had a great show, and got friends, as happens in our industry more often than not, but we did not do much business lately. I met Walther again in Orlando in 2006; after dinner in a nice Italian restaurant, we “fell” into the souvenir store next door, and there he was, shopping after a hard day at the GlobalShop. Again in Milano last October, not unexpected this time, because he had great success over the years and become one of Italy’s top shopfitters and mannequin suppliers, why he was at the Expo Shop, when we had the Milano ISO Meeting and Tour there last year.

 

So of course Walther was in Shanghai too; and of course I ran into him again at the CRC Expo!

And he was not there to import cheap stuff; but rather to export Italian design and know-how. Through his energy and efforts (I mean who else gets around like that) he had established a joint venture with a Chinese Lady, owner of more than 8000 stores! She, like most people, likes Italian design and together they ran a modernizing program involving 700 stores a year! Two Italians are permanently on the project, surely using Chinese subcontractors, but knowing Walther, not without a satisfactory bottom line back home in Italy.

See what I mean?  Shopfitting is local, but design, project management and know-how is Global!

 

From there to here.

The group also visited Maersk, the World’s largest container shipping company, and DLV a “small” forwarding company like so many others. Maersk is the 10-15000 TEU (20’ container) vessel operator, that takes care of WallMart’s supplies, Ikea and such mass retailers. DLV (like many others) are more “our size-customer” oriented, and prepared to consolidate container transportation, meaning you and I can split the volume and save cost. Most of the goods go China-USA, again most of that Shanghai-Los Angeles, no surprise there.

 

Thursday, the CRC Expo, smaller than earlier, but better?

Surprisingly, the CRC shop equipment show was the only thing in China, I have ever seen getting smaller! Apparently construction is such an important part of interior contracting, that floor, wall, furniture, building materials shows, attract prior exhibitors to other shows. A reason why CRC has moved to smaller premises, closer to town, which we unfortunately only discovered too late!

A coming shop-show in Guangzhou in June, and another recent shop-show in Beijing, has likewise spread the exhibitors, and made CRC Expo local for Shanghai based companies only.

 

But they were all there, and better than before, why there were lots of products, many EU-US partnerships, distributorships based on part production in China, and about a third of the space, on the upper floor, designated electronic equipment, theft prevention, digital signage screens etc.

A whole product range, that e.g. the EUROSHOP every 3 years has now separated into EURO-CIS annual exhibitions with great success.

 

A new Dutch director, Wilbert Heijmans has taken over the responsibility for VNU exhibitions Asia, that organize the CRC Expo on their own after Euroshop has pulled out. He convinced Tracy and I, over a coffee and a beer, that he is on the right track to re-establish the show as the number one East Asian Shop Equipment exhibition. Let’s see what happens, we wish him good luck.

 

Friday, conclusion.

Some of the most important results of a tour like this are not necessarily the factory visits, the fantastic city of Shanghai, the stores and malls. They are all important, but the people you meet, and the enormous and versatile potential of know-how you exchange, is unique. The people of China Consult, your colleagues of the shopfitting industry, US and other expatriates working in China; they all contributed to the experience, and the picture of China and it’s opportunities, we brought back home with us.    

 

The last item on the agenda, Friday afternoon, was dedicated IPR, Immaterial Property Rights, problems that are a serious part of doing business with China.  Magnus has worked as a Commercial Counselor at the Embassy of Denmark in Beijing, before joining CC. His address to the group, “How to secure your Chinese Business Venture” was a most valuable, and suitable final after a great week on this amazing country, “the factory of the World” and the greatest growth market on earth.

 

Saturday, going on and going home.

Don’t miss reading the report by Tracy Dillon in the next NASFM Magazine edition!

 

Preben Bailey

ISO Secretary General

 

All ISO members are welcome to forward specific questions to the Secretariat in relation to subjects on this web-site.

 

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