The members of The Danish Chamber of Commerce in Shanghai had the unique opportunity to meet Mr. Jorgen Jensen, President and CEO at Nilfisk-Advance A/S last week on Wednesday 11 April.
Nilfisk-Advance is a Danish company owned by NKT Holding which employs 5.400 people globally. They have sales entities in 43 countries and had a global turnover of app. 850 million Euros in 2011. Nilfisk-Advance is one of the world’s leading manufacturers and suppliers of professional cleaning equipment.
Jorgen Jensen shared his thoughts with a group of active and interrogative participants at the event held at Westin Bund Center in Shanghai.
Originally Nilfisk-Advance came to China to have their products manufactured when they, as many other companies, faced cost challenges by manufacturing in Europe in early 2000. In 2003, Nilfisk-Advance established greenfield manufacturing in Suzhou. This was expanded to Ningbo when ALTO was acquired in 2004. In 2007, they finally acquired the Chinese company, Viper, in Dongguan. Today, Suzhou mainly serves the European market and Dongguan serves the Chinese mid-market.
The latter has now become an important part of Nilfisk-Advance’s strategy of growing in the Chinese market. “You are not truly a global company unless you also have a substantial part of the Chinese market in the years to come,” Jorgen Jensen told the participants. It is expected that China will become the company’s biggest market within the next 5-10 years; larger than the US.
After entering China, Nilfisk-Advance grew rapidly, selling mostly to foreign companies operating in China. In later years, they have faced new competition from local companies, who have also grown their business in the mid-market.
“Nilfisk-Advance primarily addresses the top end of the market. It is now facing strong competition in the very important mid-market, while still being the biggest foreign company present in China.
The new local competition has grown faster than expected. To win market shares in the mid-market, Nilfisk-Advance have therefore had to change the way they acted in the Chinese market. “It is not possible to compete and understand Chinese customer needs with products developed outside China. Therefore, Nilfisk-Advance now has 40 engineers in China developing new products for the Chinese market, especially the mid-market. Mass-market brands Viper and Vikki will be part of the new multi-branding strategy in China” Jorgen Jensen told the crowd.
China has a very high priority in the company’s strategic priorities – one of them being “securing leadership in key emerging markets”. It is a “must win battle” for the company and this must be won by expanding the distribution into the market “to be in front of our customers and understand their needs,” as Jorgen Jensen pointed out. One of the ways to get there is to strengthen the distribution into 2nd and 3rd tier provinces in China.
Jorgen Jensen concluded his speech by saying that Nilfisk-Advance must secure the growth of their business in the important Chinese market. This is not just to win the Chinese market however. If allowing other global or local players to build their global strength through China, losing the battle there could jeopardize business elsewhere in the world in the long run.
