Step 3. Final PresentationCase Study on Sino-Finnish Joint Venture

Shanghai Fimet Medical Instrument

Nina KOSTAMO (Finland), Phuong TRAN (Vietnam) & Lu ZHOU (China)

CERAM Sophia AntipolisApril 2006

Agenda

1. Overview of Finnish Investments and JVs in China

2. Recap on Previous Presentations

3. New Results from China

4. Wrapping up the Interview Results

5. Fimet Shanghai: Exogamic Nature of JV

6. Fimet Shanghai: Alliance Concept

7. Fimet Shanghai: Co-operation Lifecycle

8. Conclusion

Finnish Investments and JVs in China

200 Finnish firms in China Total turnover of €10 billion 30,000 employees Majority are representative offices Over 60 firms have manufacturing plants The biggest investor is Nokia (8 JVs) 10 new firms enter the market annually Total investments accounted for €5 billion in 2005

Source: Finpro 2005

Sino-Finnish JVs: Lessons learned and recommendations In Chinese market, Finnish SMEs operate as succesfully

as large firms In order to success, there is a need for:

Clear strategical choices Careful planning Good selection of personnel Sufficient resouces Long-term thinking Patience Decisiveness to earn

Recap: Overview of Shanghai Fimet

4 parties

Finnfund

50 % - 50% Sino-Finnish Equity Joint Venture

Shanghai Fimet Medical Instrument in 1994

Recap: Conducted Interviews

1. Matti Kerppola, ManagerFinnfund, Helsinki, Finland

An hour-long, face-to-face interview with semi-structured questions

2. Gang Chen, ManagerDepartment of Marketing Shanghai Fimet Medical Instrument Co., Ltd, China

An hour-long telephone conversation with semi-structured questions

Key Results: Interview with Mr. Chen

Goals: To replace import of similar product range Introduce new and advanced technology

Expectation:JV for another 14 years Resources pooled: Funding, distribution channels, working staff and Guanxi

Risks and challenges

Differentiation: Good cooperation Proper routines Well performed operations Mutual respect

Lesson learned: Cultural respectStaff training in Finland

Difficulties: Technical dependency uponforeign partnerFierce competition fromChinese counterparts

Conclusions based on the Interviews

Different resources pooled in Respective goals Decision power Concern on technological and knowledge spill-over Pressure upon entry into WTO Trustworthy partnership

Environmental setting

•Business

•Customers

•Suppliers

•Countries covered

Company’s profiles

•Type of ownership

•Age

•Size

•Culture

•Competencies

•Technology profile

•Range of product

•Production capabilities

Type of resources

Type of objectives

Related Unrelated

Exogamic Nature of Shanghai Fimet

Alliance Concept in Shanghai Fimet

SHANGHAI MEDICAL INSTRUMENTS

Sitra Finnfund

FIMET

Joint Control

Capturing Chinese market:Being the leader in

dental equipment market

Resources-Regulation & administration support-Funding

Know-how in-Manufacturing -Product tech-Process tech-Research equip-Skills in mngt-Brand

Access to-Local market-Labor market-Local suppliers-Utilities-Distribution-Guan Xi

ResourcesAdvanced technologyWorld class brand name

Environmentalconditions

Company’sresource

profile

Advantagesto cooperate

Decision to cooperate

Pre-alliance processes

Implemen- tation

Split

Choice of a cooperative manoeuvre

List of targeted resources

Test of apptitude

to collaborate

Identification of potential

partners

Opportu-nities for

cooperation

Mgt of coopera-

tion

Confirgu-ration of the

alliance

Post-mortem

Getting out of

cooperationRisks and costsof cooperation

Top managementvalues Relaunch of search process Feedback

Cooperation Life-Cycle of Shanghai Fimet

2020199419931992

Conclusions

Fimet Shanghai is a good example of successful small size Sino-Finnish joint venture

Despite the big changes in the Chinese market and intense competition, the EJV has been probitable the last 11 years.

Clear operation, opportunity to learn from each other, ability to overcome the cultural issues and common objectives with win-win approach has enabled Fimet Shangai to succeed.

Sources

Course material

Fimet. www.fimet.fi & www.fimet.com/cn

Finpro 2005. Country report China. www.finpro.fi

Kaislaniemi, I. 2003. Finnish Silk Road – Experiences of Finnish

Enterprises in China. Sitra-Tekes-Finpro.

Vihakara, A. 2006. Patience and Understanding. A Narrative Approach

to Managerial Communication in a Sino-Finnish Joint Venture. Turku

School of Economics and Business Administration.

Thank you! Kiitos! Xie Xie!