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DIALOGUE: Bridging The Business Divide, Interview with E. Augustin v. der Lühe, General Manager of Germa-tech Consulting
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Bridging The Business Divide

BT 201601 050 19 Dialogue Highlights02

By Annie Ly

BT 201601 050 18 Dialogue 97A6942As we begin 2016 with a fresh start, businesses in China face a new set of challenges and opportunities. China's GDP growth slowing down has been widely reported, but what are the implications for foreign businesses in Tianjin in particular? We receive the expert insights of E. Augustin v. der BT 201601 050 20 Dialogue Highlights02, General Manager of Germa-tech Consulting-a foreign owned enterprise which specializes in providing business development and strategy consultation to foreign businesses in China.

With 20 years of experience in consulting on the business environment in Tianjin, Germa-tech Consulting provides a strong understanding of how business functions in China for foreign companies wishing to enter the China market. From this knowledge, we interviewed Mr. v. der BT 201601 050 20 Dialogue Highlights02 about his experiences so far, what this could indicate for business in China in the near future and what his advice is to businesses looking to operate in the China market.

Could you tell us a bit more about yourself and your background?

As a kid I lived in Germany, South Africa, Netherlands and Hong Kong. After finishing high school in Germany I went to Tianjin to study Chinese at Nankai University for one year, after that I returned to Germany to study economics, I worked in Germany for some time and then went to New Zealand to study for an MBA. After completing the MBA in 1995, on the way back to Germany, I visited my parents in Tianjin.

What made you stay in China for so long?

My parents had just set up Germa-tech in Tianjin, I helped them out during my visit. After some interesting projects, I decided to stay and worked for this company. One early project I was a Heat Cost Allocation Project, an experiment in Tianjin for charging heating fees according to actual heat consumption instead of the heated area. This new and simple method which is obligatory in Germany for residential and commercial buildings can contribute to great energy savings and consequently reduction of pollution. The project was carried out in cooperation with the Tianjin Heating Office.

Unfortunately the implementation of this method is slow. Especially in times of pm 2.5 values over 300 in the city, it would be nice if the progress would have been faster.

20 years ago huge new housing districts on the green field were starting one after the other. New districts planned for housing of 500,000 people and more were nothing special making it particularly interesting for companies involved in the construction materials sector. We managed to direct the German Federal Minister for Regional Planning, Civil Engineering and Urban Development at that time, Klaus Toepfer, to visit the Hua Yuan (Xiao Kang) housing project in Tianjin during his trip to China. During that time many companies in the building materials, hardware and household appliances area started their China operation because of the huge market potential. Many of these German companies developed well in the years and are now part odour client base. Concerning the Tianjin investment location, I would say it is a "hidden champion" with better conditions compared to many other locations in China. We have many interesting projects and I have a good circle of friends, foreign and Chinese, so I never really considered leaving China. I took over the business from my parents over 10 years ago.

Could you summarise what your company's main expertise is?

We provide transparency of the local business environment to our foreign clients, facilitating the decision making process, no matter if the companies are already in China or if they are intending to come to China.
Amongst other services, we search for optimal investment locations. Recently we encountered foreign companies from other areas in China who move to Tianjin because of its location advantages.

Understanding the labour market is an important area of our expertise. Finding the right people and developing suitable organizational structures with adequate salary schemes.

We provide accounting and reporting services specialized for foreign invested companies.

Local sourcing support: we find alternative suppliers for products thus enabling companies to reduce their purchasing costs.

Tianjin has changed drastically in the last 20 years. Could you describe your experience of the city's evolution during this time?

BT 201601 050 14 Dialogue Highlights01The city went through big changes, such as in infrastructure including the improvement of the railway system, from slow electric locomotives to the high speed trains, from a tiny provincial airport to a modern airport even with subway connection to the city, from one almost historical single subway line to a modern and clean subway network which grows every day. The roads have been widened from little one lane roads to multi lane roads with flyovers etc. The increase of cars on the road seems to be faster and traffic jams are common.

We have customers that started on a green field site in industrial parks with no factory around them in a radius of many km. Now they are huge factories in industrial parks with one factory next to the other for many km. Some started off with a project manager using a table in our office, later rented a small factory building and now some of our first customers are "high-tech" rated companies with over 1,000 employees.

Unfortunately many cosy hutongs, open air markets and beautiful buildings in the old town and concession areas had to make room for new high-rise buildings, fly-overs and wide roads.

What is your main customer base?

We have foreign customers from many different industries, machinery, renewable energy equipment, automobile components suppliers, electronics, farming equipment, household appliances and service providers. Many of our customers use Tianjin as their central base for servicing the Asian markets. Tianjin is a good location for production of some of their products, sales, logistics and services.

What has been one of the most enjoyable aspects of your work?

BT 201601 050 17 Dialogue 97A6970When I see that our proposed strategy and support has worked out and we can watch a company developing much faster than the head office has ever expected.

I've been organising a German Business Circle called the DEUTSCHER UNTERNEHMERKREIS TIANJIN (DUK). With this business circle, I've been hosting cultural events.

For one event, supported by some sponsoring companies, we invited the Jacaranda Ensemble from Brandenburg to perform their music with Alps horn, Digeridoo, Drums etc. in Tianjin. The ensemble managed to fascinate entire audience with their "world" music. In 2016 we will organize another tour of Jacaranda to Tianjin.

Shortly I am planning a vernissage with a German artist, Ekkehard Stoevesand, he travelled to Tianjin between1998 -€“ 2006, he has created a lot of impressive modern paintings with Tianjin motives of 10 - 15 years ago. Due to the fast development of Tianjin, most of his motives, which are buildings, parts of buildings and road scenes don't exist anymore and give a special insight of the artists perspective at that time.

It's an opportunities to meet interesting people, enjoy arts and to find a balance in work life.

What can your company offer in comparison to big multinational consulting companies?

We have a different style. We are smaller and maybe sometimes more flexible to coordinate special requirements by clients. I would say that our approach is quite practical oriented and directly supporting the management at the HQ and local operations.
With our experience in finance and administration, production, sales, logistics, sourcing, project management, HR we can provide a holistic service.

BT 201601 050 15 Dialogue Highlights02How have you managed to maintain such a high quality of service for your customers for such a long period of time?

At the start, we had to get a deeper understanding of the situation, environment and needs of foreign companies in China. Internally we constantly update procedures for the changed requirements and improve ways for providing more efficient and customer oriented services. We continuously update our knowledge base for our services.

What lessons have you learned over the last 20 years?

Try and find common ground between eastern and western thinking for finding solutions to handle things instead of focussing too much on sticking to traditional western ways.

Often it is necessary to accept additional steps which may not seem necessary from the western perspective but which are crucial for the Chinese understanding. It may take a little longer but at the end you get a result.

Is there a sense of competition between Germa-tech and other local consulting companies in terms of the type of business consulting you do?

There are local business consultants but I don't see much competition because the type of service which we provide is quite unique. We have built our experience and network over the last 20 years in Tianjin; we have a record of success stories for our services. We have developed our clientele which is growing constantly and most of them are satisfied with our services. Our unique style is the result of our small but efficient team always seeking for optimal solutions for our client.

China's GDP has hit record lows. How do you see this downward trend effecting business in Tianjin or China in general over the next year?

Companies with high quality products and advanced technologies have a good chance to stay in business and be successful. From that point of view, our clients have a basis for stable future business. Companies with "low tech" and low quality will face difficult times.

Especially for industries such as renewable energy, environment protection technology, agriculture equipment, high – end manufacturing equipment, automation, medical equipmentand the service sectors I see good development potential.

What recommendations do you have for people looking to start businesses in China at the moment?

Develop your business in small steps. Don't just jump into the market with a large investment only to find out it was the wrong move. Find your strengths while you grow in the market with a local team and make it fit to the Chinese business environment.

Make full use of the local strengths and expertise which is best suitable for the local requirements. You should accept the business environment as it is and understand it and then find suitable solutions for reaching your target.


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