How China benefits and suffers from Europe's woes


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    Man welding........

    - Rob Schmitz/Marketplace

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    Yrjo Trog, CEO of Norrhydro, stands in his Chinese factory in the Yangtze Delta city of Changzhou. The Finnish company sells hydraulic cylinders. The Eurozone crisis slashed Norrhydro's sales by a third in 2009. Sales have bounced back, though, thanks to Trog's decision to move manufacturing to China. Now Trog spends his time between homes in Northern Finland and Changzhou.

    - Rob Schmitz/Marketplace

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    Trog gives a Finnish banker a tour of his new factory in Changzhou. Norrhydro has patented a new technology that will increase the energy efficiency of hydraulic cylinders by 80%. This will undoubtedly lead to fast growth for the country, and he's planning to open this second factory in Changzhou early next year.

    - Rob Schmitz/Marketplace

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    Shelves of small hydraulic cylinders line the wall at Norrhydro's factory which it runs with Chinese partner Sunde. CEO Yrjo Trog says he's shared some technology with his Chinese partner in exchange for helping Norrhydro get set up in China, but he hasn't given Sunde Norrhydro's core technology. Protecting core technology is a challenge for many foreign companies doing business in China.

    - Rob Schmitz/Marketplace

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    Zhong Shengwei stands in front of a poster for Helsinki at the offices of Finchi, an agency set up by both the Finnish government and the city of Shanghai. Finchi's goal is to facilitate investment opportunities for Chinese investors in Finland, and to do the same for Finnish businesses in China. The office even has a Finnish-style sauna. Zhong is CEO of a Chinese investment company. He's already made one trip to Finland in the hopes of buying a Finnish tech company.

    - Rob Schmitz/Marketplace

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    Yang Fenghui is the China Director for the Finnish Environmental Cluster for China, headquartered at the offices of Finchi. Yang helps Chinese investors acquire Finnish clean tech companies, and helps Finnish clean tech companies find opportunities in China. Yang says the Eurozone crisis has meant business has never been better.

    - Rob Schmitz/Marketplace

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    Wang Dayin is General Manager of Ozou, a Chinese company that makes kitchen appliances like gas range burners and hoods. He's standing in one of his abandoned warehouses at his factory in Huai'an, northern Jiangsu province.

    - Rob Schmitz/Marketplace

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    Before the Eurozone crisis, Ozou ran two factories, hired 200 workers, and exported half of its products to Italy. These days, the company's revenue has fallen by two-thirds, it's closed a factory, and just 40 workers remain. Boxes of range hoods sit in Ozou's factory in Huai'an.

    - Rob Schmitz/Marketplace

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    The factory floor here at Ozou's factory in Northern Jiangsu province is empty. General Manager Wang says Ozou will now focus on China's domestic market, but he fears it may be too late. The competition is fierce, and he admits it'll take Ozou years to build a brand domestically. He says he's patiently waiting for the economy in the EU to pick up again.

    - Rob Schmitz/Marketplace

KAI RYSSDAL: You want to know why Europe being preoccupied by crisis matters? Try this. Europe is our biggest single trading partner. It's China's biggest trading partner, too.

JUSTIN ROWLATT: In fact, business between Europe and China accounts for 10 percent of all the trade done in the entire planet. For Chinese exporters to the EU, the crisis has brought, if not disaster, than certainly slower sales. But China's domestic growth means new opportunities for European companies in search of profit.

Marketplace's China correspondent Rob Schmitz reports.


ROB SCHMITZ: These days, it may seem hard to find success stories among European companies. But not if you're in China.

At a factory in the Yangtze Delta city of Changzhou, workers make hydraulic cylinders that'll be used in excavators and cranes. Five years ago, workers at this plant run by the Chinese company Sunde had no idea how to make these precision parts. That was before 2009, when the Finnish company Norrhydro moved here and showed them how. It was all part of a partnership deal, says Norrhydro CEO Yrjo Trog.

YRJO TROG: We are coming to here; we learn Chinese culture, how to do the work in China, how to go to China market. Of course, we have to give something to them. So it's a win-win situation.

Trog says Norrhydro's sales dipped by a third when the eurozone crisis struck. But sales have bounced back thanks to his decision to move manufacturing to China, a place that's quickly becoming the biggest market for Norrhydro's products. In return, Norrhydro has given its Chinese partners something they crave: technology.

Down the river in Shanghai, Zhong Shengwei heads a Chinese investment fund.

ZHONG SHENGWEI: I think China is now facing an historic opportunity. We need core technology, but we can't develop it on our own. So, we need to look to outside resources to help us transform our economy as soon as possible.

Zhong has made his first trips to Europe this year in the hopes of buying a tech company. European companies are happy to hand over some of their secrets. But not everything.

Norrhydro's Trog says he's carefully guarding the company's core technology from being copied and sold in the Chinese market.

TROG: Of course, everybody says that if you come to China, everybody's copying. But everybody's also copying in the Western world. But you have to run faster than the others.

But other companies have a hard time keeping up. Hundreds of miles away in northern Jiangsu Province, an empty warehouse with a single worker shows the other side to the EU crisis in China.

This factory belongs to the Chinese company Ozou. The company makes kitchen appliances like gas range burners and hoods. Before the EU crisis, Ozou ran two factories, hired 200 workers, and exported half its products to Italy. Now? The company's revenue has fallen by two-thirds, it's closed one factory, and just 40 workers remain.

On this day, only one worker is actually working. He's slowly sliding a range hood into a box. Ozou's General Manager Wang Dayin shakes his head.

WANG DAYIN: We've given up on Europe now to focus 100 percent on China's domestic market. It won't be easy. We have to start promoting, marketing, brand building, all of that. This is new for us.

In the absence of a plan, Wang looks to me. It's not every day a European-looking journalist visits your factory. As I leave Wang's lonely warehouse, the other employee snaps some photos of us. They'll be included in the company's new promotional material for the China market, what might look to some as a European endorsement for a company struggling to survive a European crisis.

Reporting from Jiangsu Province, China, I'm Rob Schmitz for Marketplace.

About the author

Rob Schmitz is Marketplace’s China correspondent in Shanghai.

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