CEIBS Knowledge

Faced with increasing competition from Chinese firms, European companies cannot simply roll over and play dead, but must draw on their key competitive strengths to seize opportunities created by new trends in the Asian country. That is one of the recommendations made by CEIBS Professor of Management Per Jenster, in the recently published study entitled “Future Opportunities and Challenges in EU-China Trade Investment Relations 2006-2010”. The report was financed and commissioned by the DG-Trade of the European Union.

In the research, led by Prof. Jenster, it was found that European companies must leverage their strengths to remain competitive. The inherent strengths are innovation and R&D; design; marketing and branding; servicing (after-sales, customized solutions); management operating systems; overall superior quality of goods and services; and financial strength (especially multinationals). These strengths have traditionally given European producers in China a way to hold off the competition because of their advantage in higher value-added economic activities. Increasingly, they must make new gains by offering new ‘integrated solutions’ that extend beyond the traditional selling of goods, he points out.

The study looks at the emerging opportunities that result from these strengths, within the context of the sectors explored during the research period. Prof. Jenster recommends that European operators who want to take full advantage of the opportunities China has to offer, must first do their homework. It is essential for these players to learn more about the China’s increasingly complex market, as well as build strategies and design products around local conditions and needs.

The report also highlighted the role that the European Commission can play in helping firms tackle the problems associated with the complexities of the China market, especially in overcoming or minimizing obstacles to market access. Jenster’s study names the following factors as having the most impact on China’s business opportunities in the near future:

Continued rapid market growth, especially in the services sector where many European firms are strong.
Changes in consumption patterns: China’s middle class is expected to reach over 150 million by 2010.
Cost cutting opportunities.
Environmental requirements: through its 11th Five-Year Program, China has set the target of achieving more sustainable growth through increasing energy efficiency, investing in renewable energy and improving overall environmental protection.

In summary, Prof. Jenster writes that: “Improved dialogue with China that focuses on further market opening and supports EU companies in accessing the complex Chinese market will allow both sides to draw the full benefits from complementarities between the two economies.” The professor’s primary research areas at CEIBS are international business marketing and strategic leadership development. A CEIBS fulltime professor since 2005, he also serves as Director for the CEIBS Centre of Entrepreneurship and Family Business, as well as Academic Advisor to Executive Education Programs.

Read full-text of the report:

Abstract of Sectoral Studies

Study 1 of 12 Machinery

Study 2 of 12 Chemicals

Study 3 of 12 Automotive

Study 4 of 12 Pharmaceuticals

Study 5 of 12 ICT Equipment

Study 6 of 12 Agriculture

Study 7 of 12 Financial Services

Study 8 of 12 Distribution

Study 9 of 12 Construction

Study 10 of 12 Telecommunications Services