April 22-29, the Gothenburg Executive MBA 2016-2018 class experiences executive education, business and culture in China first-hand, during a residency shared between the Chinese cities Hangzhou and Shanghai. Two of our participants, Jens Björkman, Head of Ferrous Trade at Stena Metal International AB and Johan Burtus, CEO at Kaifa AB, share their impressions from their trip to China in their blog posts:
Unsustainable Steel Overcapacity! Excess Steel Exports are Killing the Global Market! Banking Sector Unable to Stop Revolving Credits Like a Ponzi Scheme! Housing Collapse on the Way!
As an outsider looking at China from a steel supply chain perspective, these are normally the sort of headlines I will come across. They are also part of the preconceptions I carry. During the past 15 years of my professional life within this industry, China has been the major reason for both strong and poor markets. The China I have been focusing on has been one sector, a very large and at the moment problematic sector, but there are many intricate layers and nuances in China.
Upon arrival to Hangzhou – this time as an participant to the Gothenburg Executive MBA program, not a steel trade professional – my preconceptions are being questioned. It feels inspiring to see the entrepreneurial spirit and thriving businesses while visiting Hangzhou and Zhejiang University, one of the country’s top universities, for management studies. To hear stories of success and business plans for the future is inspiring. Hangzhou as a city is a vibrant incubator for IT business, it is the home of amongst others Jack Ma of Alibaba. On the Alipay platform, with the click on the smartphone ordinary Chinese can get paid, pay their bills, buy online and pay for services in a quick and trustworthy way. The Alipay app scans a QR code on a rental car, bike or restaurant and instantly transfers funds to pay for the sought after services.
China today has a middle class the size of the entire population of USA, 300+ million, who are eager consumers of goods and services. In the coming 10 years this number is expected to double to exceed the size of the entire population of Europe. The China I am meeting while in Hangzhou is that of a consumption economy. Previously I have mostly considered China a manufacturing base for exports with an unlimited work force. Of course, a nation as large as China has its challenges. Shifting the economy from manufacturing towards consumption is not done with the turn of a key, but it is clear that the country is taking incredible steps in this direction.
More and more the Chinese are adding services, IT and functionality. The number of start-ups just in Hangzhou, in the shadows of Alibaba, is something to keep an eye on, are they not? Steel is still a geopolitically sensitive issue and likely will be for quite some time. I will need to continue to keep an eye on this, but I will for certain pay a greater deal of attention to successful entrepreneurs adding value to businesses and consumers as well. China is not black or white, it is a country of many nuances in-between.
Head of Ferrous Trade
Stena Metal International AB
Gothenburg Executive MBA class 2016-2018