Status Shanghai: Full speed ahead

One reason that many foreigners prefer Shanghai is the European feel of the city. Copyright: Heidi Berg

Published by Oslo Business Region, 30 November 2020

Business is not slowing down in the world metropol, and a renewed focus on health and environment sparks opportunities for Norwegian companies to enter the Shanghai market.

Guest writer Heidi Berg, founder of ShanghaiHeidi, shares her reflections on how the Shanghai market is flourishing despite the repercussions of Covid-19, and how this creates opportunities for international companies to set up and be part of this growing market.

China was the first country to be hit by the Covid-19 pandemic, but a resolute response to the virus saved the economy from a long lasting slow down. In Shanghai the virus never spread much, and life and business has been back to normal since April. Strict travel restrictions are among the measures controlling the virus. Although it is very hard for foreigners to enter the country at the moment, international companies are still taking part in the continuous growth.

Glen Mikkelsen at DI-Asia Base helps Danish and Norwegian SMEs enter the Chinese market. Among the current 45 clients, Mikkelsen has seen most of them hampered by the travel restrictions, but much less so for those having a blend of local competence present.

“ Setting up a strong local team is key to the success for any company entering China. Never has that been more evident than this year. Companies selling into China without their own Chinese sales and technical support suffer. Those who have such key staff here have been uniformly growing on the back of China’s speedy return ”
– Glen Mikkelsen, DI-Asia Base

China is still the “factory of the world”, but the main growth driver for the economy is now domestic consumption. This is notable in the foreign community in Shanghai. The scene used to be dominated by buyers of export products, now most are involved in marketing and sales to the Chinese. This goes across categories: Consumer goods, industrials and services. Digital consumer products (APPs) is one of the few areas foreigners should keep away from: The digital ecosystems in China are unique, and it is extremely hard to adapt. In the B2B market for digital solutions there are however opportunities, as the digitalisation of businesses in China lag behind.

Within the “green economy”, the demand for international technology and collaboration will increase. 2020 has not been the year of positive news, but the announcement in September by president Xi Jinping of China becoming carbon neutral by 2060, is one of the exceptions. Over the coming years massive investments will be done in renewable energy production, energy efficiency, smart buildings and green cities.

Shanghai is a front runner in China when it comes to green initiatives. In 2019 it was the first city in China to implement a waste sorting system similar to that in Oslo, and food waste is used to produce energy. Head of the Norwegian company Tomra’s recycling business in China, Kelly Xie, has already supplied equipment to one waste sorting plant in Shanghai. “The areas for growth are now further west in the country” Xie continues.

The first near-zero-emission building in Shanghai also has a strong relation to Norway. DNV GL is well known for their commitment to sustainability, and the new China headquarter was built to reduce energy use and emissions. Now most urban development projects in Shanghai have a green focus. The success in China of Danish companies such as Velux, Grundfos and Danfoss, confirms the increased willingness to pay for high quality solutions.

The buzz in Shanghai is definitively back. Mega trends after the covid-19 outbreak are increased focus on health and environment, a promising sign for more collaborations with Norway.

Oslo and Shanghai

The relationship between Oslo and Shanghai goes way back. In recent years, it has become increasingly focused around business and academic collaboration, formalised in the 2018 agreement to facilitate trade opportunities between the two cities. You can read more about our work with Shanghai here.