Swedish giants expand Chinese operations

Swedish exports to the Chinese market is falling - but at the same time, local production by Swedish industrial giants is growing.

“It’s increasing rapidly,” said Torbjörn Bäck, head of the Swedish Trade Council’s office in Beijing.

During the first nine months of 2005, the export of Swedish goods to China fell by a billion kronor to 13.6 billion kronor, which represents just 1.9% of total Swedish exports. But Swedish companies’ operations in China are worth at least three times more than that – and the trend suggests that will increase further.

“Yes, that’s my opinion,” said Torbjörn Bäck to TT.

Engineering company Sandvik has doubled its production in China in the last two years, reaching a turnover of over 2 billion kronor in 2005.

Volvo Cars is in the planning stages for producing cars in China, perhaps next year. And ball bearing manufacturer SKF has in the last two years opened three new factories in China as well as expanding the capacity of an existing facility.

“We working at a pretty good pace,” said SKF’s information director Lars G. Malmer.

The company’s annual turnover in China is around 2 billion kronor after having increased by over 20% three years in a row.

Almost all of the major Swedish manufacturers have operations in China today. And the suppliers are beginning to follow.

“Now we are seeing the next stage – even service sector and consultancy companies are coming,” said Torbjörn Bäck, mentioning consultancies such as Semcon and Syntronics, as well as banks such as SEB and Handelsbanken which are increasing their presence in the country.

Telecoms, with Ericsson at the forefront, accounts for a major chunk of Swedish exports and production in China – and this year is expected to bring an important decision on 3G licences in the country.

But what makes for success in China? A good offering which is highly competitive, says the Swedish Trade Council – unsurprisingly, considering the rush of the world’s companies to establish operations in the country.

“Many companies are in the grip of euphoria – the atmosphere around China is sometimes hysterical and maybe some are diving in too quickly without enough preparation,” warned Torbjörn Bäck.

TT/The Local