Step 3. Final Presentation Case Study on Sino-Finnish Joint Venture Shanghai Fimet Medical Instrument Nina KOSTAMO (Finland), Phuong TRAN (Vietnam) & Lu ZHOU (China) CERAM Sophia Antipolis April 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, Manager Finnfund, Helsinki, Finland An hour-long, face-to-face interview with semi-structured questions 2. Gang Chen, Manager Department 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 respect Staff training in Finland Difficulties: Technical dependency upon foreign partner Fierce competition from Chinese 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 SitraFinnfund 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 Resources Advanced technology World class brand name

Environmental conditions Company’s resource profile Advantages to 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 cooperation Risks and costs of cooperation Top management values Relaunch of search processFeedback Cooperation Life-Cycle of Shanghai Fimet

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. & Finpro Country report China. Kaislaniemi, I Finnish Silk Road – Experiences of Finnish Enterprises in China. Sitra-Tekes-Finpro. Vihakara, A 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!