Suitable for Growth - All-in for China Page 7

Suitable for Growth |

China will become

our second home

market. Our goal

there is to grow by

50% annually.

the large number of SME's in Denmark constitute the backbone of the national
economy.

Therefore, the Danish Industry Foundation and the Universe Foundation have joined
forces in the Suitable for Growth (SfG) project and set forward to support six Danish
SME's in their endeavor to enter the Chinese mid-market. The aim of the SfG project
is to learn from the specific experiences of the participating companies with the
purpose of devising a general approach to success for Danish SME's on the Chinese
mid-market which could increase the competitiveness of Danish industry and create
more jobs in Denmark.

This report documents the findings after approximately 15 months of work half way
into the project. The findings are not conclusive, but made public at this point in
order to increase interest in the project and to encourage more companies to follow
the project during its remaining period.

The primary target group for the report is top managers in Danish SME's that are
present in China today and who are considering growing their business in this market.
The findings from the SfG project are structured into four general preconditions or
keys for success the 4 A's which can be used to initiate a discussion and align
expectations between the top management sponsoring the new business initiative and
the team executing the development project in China.

Companies who are already deeply engaged in the endeavor of entering the Chinese
mid-market and now find themselves in a fog of barriers and unforeseen challenges
may benefit from reopening a discussion on these keys for success. Also, companies
with a more general outlook towards emerging markets may consider this a report of
relevance, as can researchers, consultants, teachers, etc. within the fields of emerg-
ing markets and business development.

All readers must bear in mind that the results presented in this report are preliminary
and should not yet be seen as complete or proven to lead to a successful business.
The SfG project hosts a Ph.D. research project, so the final report will of course be
based upon scientifically proven results.

The report emphasizes practical application and makes wide use of case stories to ex-
emplify various situations. All cases originate from either the six participating compa-
nies in the SfG project or from some of the other companies, who have been invited
to share their experiences from the Chinese mid-market. All cases in the report are
anonymous, as the SfG project works under high confidentiality.

The SfG project team at Universe Foundation wishes you an insightful experience:
· Peter Skat-Rørdam President of Universe Foundation
· Peter Jyde Andreassen SfG Program Director
· Thomas Aakjær Jensen Senior Innovation Specialist
· Cao Yangfeng Ph.D. Researcher
· Peter Hesseldahl Senior Innovation Specialist

The Chinese B2B mid-market can be characterized by: 1) intense competition from mainly local

companies, 2) price levels at index 40-60 compared to the premium market, 3) low margins, 4)
high growth rates of 30-50% per year and 5) customers focused on value-products, with optimal
price/quality relation.