Mats Bergman was appointed as the Swedish trade commissioner in China by the Swedish government one year ago. He also heads the Swedish Trade Council here. Bergman spoke to CHINA ECONOMIC REVIEW about how the "Made in Sweden" brand is looking to China’s emerging middle class as a fresh source of demand.
Q: How many Swedish companies are coming to China these days?
A: There are 700 Swedish corporate enterprises in China today, and a new one arrives on average every four days. Keep in mind that most of them are not unique companies, so you have maybe 400 unique entities. We have worked with a little more than half of them.
Q: Some say that the Swedish brand just doesn’t resonate in China. In the West it represents high quality and good design for a decent price, but here it seems that many consumers either want something really cheap or really flashy.
A: I think what you are describing in the Chinese market is very typical for a developing country. You have a small number of people who want to show off; the rest are still poor. But you also see an emerging middle class in China. I think as the Chinese market matures, demand for Swedish products will increase. And they’re not doing that bad now. Ikea and H&M are actually doing well. And yes, Sweden is perceived as quality and safety, but also is known for high tech and innovation, through Ericsson, for example.
Q: Any other examples besides Ericsson?
A: The companies that I am thinking of are smaller. A company I know called Xelerated has only 86 people – six in China – but is supplying technologies to Ericsson and Huawei. And then you have content providers like Spotify moving in. Of course there is also the environment and sustainability; there you have the likes of Tengbom and Sweco – those are architects – and companies such as Envac, which specializes in vacuums and waste transporting systems.
Q: What sort of sentiment are you getting from the Swedish companies you speak with?
A: Originally, we thought that even though Western markets would be hit very hard by the downturn, Swedish investment in China would continue apace. That was not entirely accurate. We have seen companies become more careful and slow down their investments, especially during a year when Swedish firms felt they had to focus on nearby markets in Europe. We saw a sharp drop of the number of Swedish expats in Beijing, and enrollment at the Swedish school declined. Not that many companies actually left, but there was a drop in business activity from the Swedish side here in China.
Q: Any signs of a turnaround in investment strategy?
A: Yes. Atlas Copco, for example, is moving one of its division headquarters to China, which is a big deal. It indicates a broader view of China evolving in Sweden – China is not just a place you do sourcing, but also a place where you can do product development, engineering, design, and sell to markets outside China.
Q: At home, Swedish firms work in a very strongly regulated environment. What happens when they come to China, a place where there are so many loopholes?
A: I think it is inherent in Swedish companies to think about corporate social responsibility. For many of them it is practically impossible to run their business one way in one country and completely differently in another. Even so, there have been incidents where Swedish companies have not given this as much attention as they should, which I think was more due to na?veté. Generally speaking, Swedish firms are aware that if they don’t apply similar policies here as they do in Sweden, sooner or later their clients, the management board or the media will start asking questions. And that can get very unpleasant.
Q: How heavily is the Swedish government involved in lobbying on investment policy or advocating for national firms? Does it hold investment tours and try to help Swedish firms get contracts?
A: It does, but it does less than the French, for example. There are some companies that wish the Swedish government would participate even more.