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Finnish SMEs doing well on the market in China

Finnvera's Mika Relander visited Finland in the midst of his assignment in China. Finnish companies say they are doing reasonably well on the Chinese market, Relander told.

03.04.2019

Although the Chinese economy has taken a slight downward turn, Finnish companies say they are doing reasonably well on the Chinese market, according to Regional Manager Mika Relander at Finnvera. The outlook for the cleantech and ICT sectors is good. The new law on foreign investments may also open up new opportunities – but also bring new obligations.

Relander will be in Shanghai until June to survey the Chinese corporate financing sector. In 2018, Finnvera’s export credit guarantees to China grew to EUR 93 million from EUR 3 million in the previous year, after nearly a decade of low demand. Whether this was due to individual large transactions or a more continuous increase in the demand for export credit guarantees is what Relander and Finnvera intend to find out. The goal is to gather information that will benefit Finnish export companies in projects directed to China.

Chinese buyers are increasingly interested in the operations of Western financing channels and in using them. Relander says he has noticed that Finnvera is fairly unknown in China, and improving Finnvera’s recognition could also increase demand for financing. That is why Team Finland cooperation in the area is important and benefits the entire network.

China is a potential market area for not only Finnish large corporations but also for SMEs.

“Among SMEs, in particular, the experience is that orders have increased, rather than decreased. According to SMEs who have recently arrived in China, the growth of business has taken a steep upward turn within a short period of time. Of course, the companies know that there will be challenges and that the areas of China where operations will be pursued and the client groups to be targeted must be defined clearly,” Relander says.

ICT is one of the sectors that are doing well in China. According to Relander, official sources in China say that environmentally friendly technologies, in particular, are in demand in the country. Relander estimates that products and projects that have undergone Western environmental and social impact assessments are in demand, since Chinese buyer companies find the assessments to be beneficial for them.

“Among SMEs, in particular, the experience is that orders have increased, rather than decreased."

More positive attitude towards foreign companies – the counterparts are competitive Chinese enterprises

A new law concerning foreign investments was recently presented in China. According to the law, foreign companies would be in the same position on the market in China as Chinese companies, which is an indication of the attitude towards foreign enterprises being more positive than before. The law is scheduled to take effect at the beginning of 2020. Relander says that the timing of the law may have been affected by the threat of a trade war but also by the fact that Chinese companies are more competitive financially than before. Although this means that the economic power is opening up opportunities for Finns as well, there may also be new challenges on the horizon.

“In the future, it may not necessarily be as easy to be a Western company in China, since both the opportunities and obligations will be the same for foreign and Chinese companies,” Relander says. 

Read also:

Demand for export credit guarantees emerging in trade with China – understanding the underlying reasons may improve export companies’ prospects

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