White Paper – Swedish companies show resilience: Analysis of late September’s media reporting

In September 2018, two events took place that resulted in an increased reporting about Sweden in Chinese media. SwedCham has analysed the events and potential effects on Swedish companies in China. The results presented in the white paper below show that the majority of the interviewed companies have not been notably affected, and continue to show strength both as consumer brands, as well as employers.

Highlights from the report include:

  • 77% of surveyed SwedCham member companies have not been negatively affected by the events.
  • 23% of companies state that they have been affected, reporting mostly comments in social media, worry amongst customers and/or employees and cancelled meetings with partners, media and  as examples.
  • Overall, 8 out of 10 Chinese interviewed in Beijing and Shanghai have had an unchanged or more positive image of Sweden throughout the year.
  • Among the 22% that report a worsened image, the effect of the events is clear. With 55% of viewers reporting a worsened image, the effect is most pronounced among viewers of the Svenska Nyheter segment.
  • Companies express a certain uncertainty of long-term effects and ask for extended studies of Sweden’s brand in China focusing on the consumer market.
  • SwedCham notices the need to initiate a dialogue regarding what types of communicative support that Swedish companies abroad may need under similar circumstances.

Click here for the full paper:

White Paper: Analysis of late September’s media reporting.

Swedish Companies and China’s Digitalization

Background

China is, among other current reforms, shifting its economy towards more value-added sectors of the global production chain, as part of the “Made in China 2025” strategy. Underlying is a drive towards applying the tools of information technology to production. Digitalization can be seen as a vital component in achieving these goals, as detailed in the State Council documents outlining the plan back in 2015.

In parallel, China is witnessing the rapid development of e-commerce as a mainstream phenomenon. By February 2017, e-commerce represented 15.5% of total retail sales in the country, having generated ¥5.16 trillion in sales in 2016 according to the latest report from the National Bureau of Statistics.
It is, accordingly, no surprise that Swedish companies in China are now considering digitalization a main strategic priority, with 1 in 10 putting it ahead of all others.

prioritiesdigitalization
Outlook

The broader picture for Swedish enterprises in China appears rather positive with the Chinese market being considered one of the most important for the interviewed Swedish firms and almost two thirds of the respondents to the Business Confidence Survey looking at increasing investments in the country during 2017.

Among the companies interviewed for this paper, there is a consensus recognizing enormous opportunities offered by this push towards digitalization for “lowering costs with more efficient processes, purchasing and marketing [...] both in terms of market access and process development”. Swedish companies are moving to position themselves in that respect, with all of the respondents indicating that they already have or are currently developing a digital strategy.

Hurdles

The two single most important challenges affecting the respondents to this years Business Confidence Survey are a perceived discrimination against foreign companies by the Chinese authorities as well as difficulty of access to skilled labor.

In terms of digitalization more specifically, the issue raised most often is that of the recently implemented cyber-security law, as it “seems somewhat unclear exactly how the new law will be implemented, and the consequences [it] will have for companies”. In particular, the ability to transfer customer and employee data in and out of the country, as well as an announced crackdown on VPN providers, affecting the connectivity of foreign firms, are pointed at.