German CEO’s China Knowledge Drives Firm’s Expansion Strategy
May 30, 2018. Germany – “The Edelmann Group has a strategic roadmap to do something bigger in China. We are actively looking into expanding our footprint there,” says the company’s CEO Oliver Bruns, speaking on the phone from their HQ in Heidenheim, in the south of Germany. “China has been an important focal point in our business strategy and I hope to use my knowledge and the relationships I built in China over the years to shape our path for the future.”
Many of us consumers have likely held an Edelmann product in our hands at some point. The 105-year-old family business provides packaging and related services (such as design and consulting) for global leaders in the healthcare, cosmetics and consumer brands markets and has since become the global point of reference for the industry. It may very well be the company that produces the packaging for your favourite electronic gadget. Last year, its 2,800 employees produced 5.5 billion pieces of packaging and leaflets, bringing in sales of more than 300 million euros. For the last 11 years it has been in China, Edelmann has been focused on Beijing’s healthcare market, steadily increasing capacity to keep up with growth of about 20% a year. Now Bruns wants to expand into other market segments, and he also wants to work a lot more with Chinese companies going global. “Local demand is growing in China; plus we are helping Chinese companies, who are now happy working with us in their home market, go abroad,” he said. “In the past we helped international groups who were going to China. Now we are also working with Chinese companies going global.”
The healthcare and cosmetics segments account for the majority of Edelmann’s global operations. Fast moving consumer goods make up the rest but is the fastest growing segment. The company’s expansion in China will be a chance for companies in a wider range of segments (makeup and beauty care, electronics, confectionary, fashion, sports, etc.) to benefit from its expertise. “Now China is basically the only country where we are only operating in one sector, healthcare. We want to change that and expand to other sectors as well,” says Bruns.
With China expansion now a strategic goal, he anticipates that he will make several trips to the country this year, visits made a lot easier because he has a strong China network and he understands what it takes to do business in the country. His China experience, he says, gives him an edge as it has prepared him to live and work anywhere in the world. “If you have lived in, worked in and truly experienced China, nothing can shock you anymore,” he says with a chuckle. “I have the mechanisms and tools needed to understand its fast-paced decision making – and often unpredictable – environment; and that has become my competitive advantage over many other Germans and Europeans,” he adds.
Bruns’ relationship with China began when, with a scholarship from global pharmaceutical brand Bayer, he enrolled in the MBA programme being offered at the Shanghai Campus of China Europe International Business School (CEIBS). He interned at Bayer Shanghai while studying, and worked for the company’s Hong Kong office after he graduated in 2008. Though his portfolio covered the entire APAC region, mainland China was the most important market during Bruns’ almost two years at Bayer Hong Kong. Since then the German national has worked mostly for firms with ties to his homeland, but there has always been a need for his depth of China knowledge. “Over the years I was always being asked to provide context into China or for my input during discussions. I also became sort of an advocate for China,” he says.
Now his China knowledge has come in handy again in his role as CEO of a company that does not view the country merely as a source of cheap labour where low-quality goods are produced. That’s because Edelmann offers its clients an opportunity to access the same high-quality products from any of its currently 19 locations around the world. “We do not produce low-cost solutions in China and then export to other countries. This is not what we do. We provide the same products, the same quality at all our locations so we can create a global deal for our clients,” Bruns explains. “It’s part of our positioning strategy to make sure we are close to our customers, to sell our products in the markets where they are made; because in the end it doesn't make sense to ship packaging material around the globe. We want to source as much local inputs as possible and produce as close as possible to our customers.”
The level of innovation coming out of their China operations and the team’s strength in spotting trends that are then rolled out globally are among the other reasons the company considers China a major part of its operations and future growth. “We are seeing increasing innovations and trends coming from China, where our team serves not just their local market but also helps identify local trends that are then spreading globally,” Bruns says. As a result, Edelmann China has been given the special task of screening the market for the next big thing. Bruns also has high praise for the rest of his global team, saying their openness to change has helped make his job easier since he was appointed CEO last October.
For other European companies hoping to succeed in China, he offers this advice: have a long-term strategy and bring only your latest technology. Without cutting edge tech, he said, you won’t be able to compete because China so often leapfrogs over existing technology. He adds that this could also be an opportunity for European businesses that can benefit from the expertise of local Chinese employees who are used to an environment where a steady stream of new tech is expected. “There’s a huge amount of talented people in China and that’s very valuable for a global business,” he says. This ties into his other bit of advice to incoming companies: make sure you have the right talent, a mixture of locals and non-Chinese employees who have a strong understanding of the China market and business environment.
It is equally important, he added, for Chinese companies expanding globally to understand the markets they are targeting. In Germany, for example, don’t be offended if they get straight to business during meetings, skipping the ‘bonding over baijiu’ for which China is known. The key, he said, for Chinese firms going to Europe and vice versa, is consistent and clear communication that will ensure transparency on both sides. “You can never ‘over communicate’. Talk to each other, explain your point of view,” urges Bruns.
Strong ties between both governments also support growth. Bruns believes the 15-year-old China-EU Comprehensive Strategic Partnership is “absolutely essential” for business on both sides. “How would we serve our international clients and support Chinese companies going global without it?” he points out. “We have key suppliers in China, so a good relationship between China and the EU is essential. Our business would be seriously harmed if the relationship wasn't going well.” CEIBS alumni from both sides, he adds, play a major role in strengthening China-EU ties. “The common knowledge we have about both China and Europe and the personal relationships we have built are very, very important,” he says. “It makes doing business easier, without a doubt!”
How Edelmann fosters China-EU ties:
“We are a technology bridge: we bring technology we develop around the globe to China and take Chinese technology to the rest of world. We also bring international staff to China and export Chinese talent globally. We enhance business relationships, thereby creating commerce and common interests between China and its trade partners. We are an integral part of matching business partners on both sides,” says CEO Oliver Bruns. Since Bruns has been at the helm, the Edelmann Group has expanded its India operations, where it now has more than 1,000 employees working across four locations. Now he has shifted his attention to strengthening Edelmann’s presence in China.
This is part of a series of alumni stories to highlight the role CEIBS has played, and will continue to play in the years ahead, as a role model of effective China-EU cooperation, a platform to further enhance China-EU communication and cooperation – both in business and culture – along with providing a window into China's reform and opening up in the education sector.