SME center boosts individual strengths

Updated: 2012-07-17 02:42

By He Wei in Shanghai (China Daily)

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Relaxing in a coffee shop with a cappuccino and a croissant, it's easy to dream about what it would be like to own the place.

For many people, the idea of running a cafe is not just a luring business but also a dream. Wang Zhendong tries to help people realize those dreams by connecting local coffee aficionados with the world.

A lecturer on tourism management at a Shanghai college, Wang knows that coffee is seen as a social, affluent, and downright hip habit by the growing Chinese middle class. So he opened a night course on coffee house management, which won widespread appraisal.

But he faced one particular challenge: the lack of good roasting techniques.

The booming coffee business is visible in Shanghai from the rapid spread of chain stores to the emergence of character-driven neighborhood nooks. But for all its popularity, few have the world-class coffee bean roasting skills seen in European and Caribbean nations.

Wang sensed the opportunity of integrating the largely fragmented industry chain that employs at least 100,000 in Shanghai.

"We want to go abroad and bring in the ingrained cafe culture with the best possible roasting techniques," he explained.

But he could not have taken the first step without the aid of an incubator program.

In a random visit to the Shanghai Small Enterprises Center, an organization sponsored by the municipal government to help develop small and medium-sized enterprises, Wang overheard a plan to form an incubator that would strive to build an environment of inspiration sprinkled with some shared services.

The people brainstorming over the idea were sipping coffee.

Wang was well aware that selling coffee to Westerners is as difficult — if not more — as an American running a tea business. But he believed that, with the right formula, he could penetrate the blossoming take-away market in convenience stores.

Last year, he established the Coffee Association of Shanghai, the first of its kind in the city, aiming to combine like-minded small businesses to reach out for world-class technology.

The association quickly became a hot topic among foreign investors. Leveraging the resources of the SME center, Wang made contacts with coffee-industry unions in Colombia, Brazil and India and is in the process of striking import deals.

After that, he invited guest professors from Japan and the Netherlands for his coffee shop management class and has just started talks with an Italian vendor, which might finally lead to a joint venture on a coffee bean roasting business.

"It's hard to approach people on my own. We need a concerted effort," he said.

Dai Jie, head of the international cooperation office of the Shanghai Small Enterprises Center, couldn't agree more.

His current post was created four months ago to meet soaring demand from SMEs that wish to have a global presence. Since then, he has often worked overtime.

Home to about 500 SMEs, the center currently oversees 50 industry associations in Shanghai and handles several exchange programs for Chinese and foreign companies every week.

"We try to link local small companies with their international counterparts in the hope that efficiency, energy and creativity will blossom," he said.

So far, more than 100 firms have benefited from the exchange platform, either getting special funds or locating foreign partners. Shanghai Guangyu Automobile Air Conditioning Compressor Co is an example.

Established in 2002 by veteran car engineer Dong Rongyong, the family-owned company wants to build a homegrown brand of automobile compressors.

Dong, a former employee at the State-owned Shanghai Automotive Industry Corp, realized that even a company such as SAIC was failing to master leading compressor technologies, leaving the domestic market firmly controlled by foreign players.

To endure, a family business must have the willingness to reinvent itself, Dong said. After introducing the first production line from Japan, Dong hired more than 30 research fellows in a plant with 300 employees to focus on original research and development.

Today, the company boasts more than 30 patents and holds half of the market share of the domestic commercial car segment.

While Dong's push to build an indigenous name drove the company to innovate, it also led to an unexpected problem: reluctance to compromise on foreign partnerships.

"When we were on track to form a partnership overseas, the president insisted that we be the controlling party of the joint venture, so the negotiation reached an impasse," said board secretariat Dong Yaojun, who is the nephew of the older Dong.

So the company turned to the Shanghai SME center, which has just started to launch regular international fairs segmented by industry and is bridging the demands of various SMEs from home and abroad. The center awarded Guangyu 4 million yuan ($627,000) as an incentive to develop core technologies.

Soon the younger Dong became an active member, joining a group trip to Japan and South Korea, where he made numerous contacts that were valuable to expand his business.

"The SME center knows exactly our needs, and they are good at matching us with good contacts without sacrificing our interests," Dong said.

Tang Wenming and his company, License Software Consulting Co Ltd, can take some credit for helping the SME center with precise matchmaking.

His company designs custom-made compliance automation software that helps small Chinese firms gain a foothold in Europe.

Tang saw his business grow through the collaboration with the SME center and gained many of the Fortune 500 companies as his clients.

But he had broader goals. Aside from big companies, there were thousands of smaller foreign companies that were eyeing China but couldn't afford to establish entities on the Chinese mainland right away. So he decided to serve them in their hometowns.

Tang flexed his muscles first in 2006. He picked the Netherlands as his company's overseas headquarters for its inclusiveness, good public security and transparent business environment. Everything went smoothly except for one thing: He was alone.

"Our company was too tiny to build a reputation and a network there," Tang recalled. "Nobody bothered to meet us. We cannot survive without resources."

He did not make another attempt until 2008, when he joined an incubator program set up by the Yangpu Technology Innovation Center, the nation's top business incubator for early to middle phase startups.

Tang outperformed competitors and won the top place on a Sino-European Entrepreneurship Plan, which was introduced by the center.

As members of the Chinese delegation visited Europe under the plan, Tang and his colleagues felt "extremely flattered" when they were greeted by the Dutch vice-minister of commerce and a number of senior executives from the customs and tax departments. And from there, many problems were easily solved.

"Small is beautiful. But we need to get together to magnify our strengths," he said.