Fredrik Ektander first came to China in 1991. He was then based in Hong Kong as Regional Head of SEB Trading Capital Markets, responsible for the North East Asian markets including China. He recalls his first visit to the Agricultural Bank of China, (ABC) Head office and a meeting with the Head of the International Department.
“He was dressed up in an old green uniform with Mao and Chinese flag badges. He talked about the rice harvest, the latest 5 year plan, the Party and Mao’s thoughts. He was not at all discussing banking. My first reaction after the meeting was, “this will never work”, he says.
20 years later, China has become the world’s second largest economy both in nominal and PPP terms and Ektander has been able to follow that development very closely, as Head of Trading and Capital Markets in Hong Kong from 1991 to 1994, the same position in Singapore from 1994 to 1998 and since 2006 as Chief Representative for SEB in Beijing.
“Working with banking in Asia and being able to see the new China developing in a financial perspective under 20 years has been a fantastic journey and an interesting experience,” he says.
According to Ektander, many Swedes, and other foreigners for that matter, either don’t understand what’s really going on in China or have preconceived ideas of the country. All they see is a big and dangerous communist state with poor human rights conditions, large environmental problems and corruption. However, that is only part of the description.
“China has during the last 30 years transformed its planned economy to a fast growing state capitalist country based on a one-party system with a mix of capitalism, market economy, socialism, all with “Chinese characters”. It has also lifted 400 million people out of poverty. This combined with enormous FX reserves and a relatively stable financial position has created a platform for China to regain its former position as the world’s largest economy, a position it had some 400 years ago,” Ektander says.
According to Ektander, Chinese political leaders have the benefit of studying other countries’ political and economic systems when developing their own. They are also closely studying political and financial crises that have occurred and are occurring, such as the banking crisis in South East Asia in 1997, the ongoing financial and economic problems in Japan, the Swedish banking crisis in 1993 and of course the development in the US and Europe in during the last three years.
“The Chinese banking system is very central in the domestic economy and the Chinese people save a very large part of their income in banks, hence a banking crisis in China could have very serious effects on the whole system,” Ektander says.
“The fast growth of the economy that to a large extent has been export driven has resulted in the world’s by now largest foreign exchange reserves. These represent 30 years of public savings that today predominantly are used to finance other countries growing deficits. We should however expect more strategic foreign direct investments in different fields in the future such as high tech companies, commodity producers, financial institutions, etc. China will need to invest heavily in developed and developing countries around the World to secure future supplies of raw materials, commodities and technology.”
“One of the future challenges for China will be to rebalance its domestic economy from export and investment based to more private consumption based. This will require improvements and huge investments in the social and pension systems and healthcare services. Another challenge will be to move 200 to 300 million people from the countryside to cities during the coming 20 years.”
“Sweden has a special role in China. It was the first western country to establish diplomatic relations with the People’s Republic in early 1950 and has since had good relations with the Middle Kingdom. Sweden’s highly developed social welfare system, high tech companies and environmental protection industry have served as a models for Chinese politicians planning for China’s future reforms.”
So how do you succeed in China’s booming economy? According to Ektander it is to ask yourself why you are here and what your unique selling points are and to understand the Chinese consumer.
“Ikea and H&M have been and successful showing good growth in China. The Danish fashion group Bestseller with brands such as Vero Moda and Jack and Jones is another example of a successful foreign player on the fast growing domestic consumer market,” he says.
In addition to his role as Chief Representative of SEB in Beijing, Fredrik Ektander is also devoting time for the Swedish Chamber of Commerce where he holds the position of Chairman of the Beijing Chapter as well as the European Union Chamber of Commerce Banking Working Group where he is Vice Chairman.
“In my different roles I get the benefit of seeing and learning a lot of what is happing in the Chinese society, and that is very interesting,” he says.