SOFT-LANDING ZONE IN CHINA: THE EU TECH CENTER

Florian Frhr Von Tucher Profile

Florian Frhr. von Tucher

Chairman

EU Tech Chamber

Let’s start by going back to the future. It is Venice in 1505. A burntout ruin just a gondola ride down the Grand Canal from the Rialto Market and right next to the Rialto Bridge is the Fondaco dei Tedeschi, the German Merchants’ Inn. Originally constructed in 1228, the building had provided a business base for German traders for nearly three hundred years. Trade during the late Middle Ages flourished all over Europe. Famously, the Hansiatic League, comprising some German and Polish cities, dominated trade in the Baltic and along the North Sea coast, growing in power and influence and negotiating trading terms with countries like England and Holland. But the winds of change were blowing. A confederation of cities was ultimately no match for the nation state, and by the end of the fifteenth century, the Hansiatic League’s power was dwindling.

This may have given the German merchants in Venice pause for thought. Was the medieval model of a business hub worth persisting with, given the huge expense of rebuilding in these uniquely challenging conditions? But then, Venice was one of the continent’s major trading cities, the gateway between Europe and Asia, and Italy was an extraordinary powerhouse of innovation and creativity. The Renaissance was still in full swing, and amongst the more spectacular achievements in art, architecture, philosophy, literature and so on, the development of double-entry bookkeeping (by an associate of Leonardo de Vinci) facilitated a revolution in the conduct of business, substituting bills of exchange for the cumbersome handover of sacks of silver coins, which in turn expanded the scope of global trade exponentially.

So the German merchants took the plunge and rebuilt their hub, which provided storage for their goods, offi ce facilities on the fi rst fl oor, and extensive accommodation above that. Its beautiful white façade was a gleaming addition to the frontages along the Grand Canal and was adorned by frescos by Titian, while the interior boasted art by Tintoretto and Paolo Veronese. Who would not have been delighted to use such a base for their trading activities? But while we can enjoy contemplating the merchants’ pleasure at their restored headquarters, what relevance do those bearded and begowned ancients with their quills and abacuses have for us today?

While everything has changed about the way we conduct business, at the human level the fundamentals remain the same. Although you can make a fortune playing stock markets around the world, growing a company and expanding into new markets still relies on human contact and engagement. That, at any rate, is what we at the EU Tech Chamber believe, which is why we are reviving this ancient model of establishing designated business hubs for Europeans around the globe.

We recognise, as they did, that to break into a market and expand your trade, you must have a human presence in your target community ‒ someone who understands the local culture, who has the contacts needed to form the first relationships, and who knows their way around the bureaucracy, the banking system and the whole culture in which the business needs to be conducted. And so we are setting out to provide our own version of the Fondaco dei Tedeschi in a series of EU Tech Centers.

These purpose-built offices will contain all the expected services, including staff . In addition ‒ and crucially ‒ we will recruit a local representative to navigate your entry into the local economy, troubleshoot any problems in setting up your own local branch, and deal with banking, local taxation and all the multiple complexities of a completely new working environment. The aim is to provide a comprehensive ‘tool box’ that will guarantee your company a ‘soft landing’ so that you can start building your client base with minimal difficulty. Remarkably, we offer all this at a minimal cost.

Apart from paying for your individual representative, everything is free ‒ until you have established yourself and are making a profit ‒ at which point we will ask you to start paying for the services from which you have benefited. We estimate that in the time it takes you to secure two or three clients, which will push you into profit, you will pay out some 20,000 euros. Whereas, if you did everything yourself ‒ rented your own office, hired secretarial staff, paid for services, found someone to guide you through the maze of local regulations and find you clients ‒ you could be looking at expenditure in the region of 150,000 euros a year. You would need at least five times the number of clients to compete with our model.

Too good to be true? How is it even possible? Although we are a nonprofit organisation, we have a large membership of over 1,800, each paying a modest subscription. In addition we have several wealthy and generous sponsors who donate considerable sums of money because they agree with our principles and approve of our aims. Why are we doing this?

There is a personal aspect to the story. I come from a commercial family and have worked my whole life for the Tucher Group. As a young man, I was sent to China to develop business there and lived for ten years (from 2005 to 2015) in Beijing. I started by setting up an engineering company (the Tucher Group’s core activity), but as I found my feet, got to know my way around and developed an expanding network of contacts, I extended my horizons to include renewable energy and even real estate and infrastructure projects.

 I learned the vital importance of those networks and the way one contact leads to another in ways that could not be predicted. And this is what we aim to provide with our centers. As more clients sign up and start developing their profiles in their new surroundings, the leverage of the whole group increases. If X can’t provide what a potential client wants, then maybe he can put them in touch with Y, who can. So not only will our hubs provide a reassuring and well-serviced base from which to do business, but collectively our clients will be able to punch above their individual weight.

Expansion in new markets is one of the drivers for the whole enterprise, and we believe that this collective reputational factor will facilitate this.

With each of our EU Tech Centers making its mark, it will become natural for local interests, even government departments, to think of our members first when there is something they need, assured that the quality is guaranteed and that the ever-expanding team will almost certainly be able to supply whatever is required. A conglomerate mass of high calibre expertise will inevitably create a magnetic pull far greater than any individual company, however excellent they may be. We also believe there will be greater media interest.

The opening of each EU Tech Centers will be a big news story in itself, but subsequently there will be a constant stream of success stories, attracting more attention and spreading the word about the growing contribution the Europeans are making to the economy and community which they have joined. So, where are we starting? In North East China, in the Liaoning Shenfu Demo Zone located between Shenyang City and Fushin City, which are both serviced by an international airport. China is an obvious place to begin because you have to be in China. It is the Leviathan of emerging markets, with a population of 1.3 billion people and seismic changes right across the economic landscape. China is still following the West’s development curve from an agrarian society to an urban one. Existing cities are expanding; new ones are being built.

It is estimated that over the next ten years, 150 million people will move into the cities, and China’s building programme will, it is estimated, equate to the same number of square metres as currently exist in the United States. Imagine building a new New York, a new Chicago, a new Los Angeles ‒ and all the smaller towns in between ‒ in the next ten years. It is almost impossible to comprehend. Yet there can be no doubt that the Chinese have the ability to do it. Even today, you can compare the GDP of each province in China with the GDPs of various nations from around the world, and they match up. Overall, China is a match for Europe, and it is generally acknowledged that China will replace the US as the world’s biggest economy in the foreseeable future. The only question is when.

The future awaits!

China will also become the world’s single biggest market. Currently, it has a middle class market estimated at around 150 million. This is predicted to increase sixfold by 2050, which means almost limitless possibilities for companies catering to richer consumers with higher expectations and ambitions for a more sophisticated lifestyle. The incentive to get in early is huge, which is exactly what we are doing.

Our China EU Tech Centre is already under way, and we will be able to open its doors in 2022. But in the meantime, our hosts have leased us an office block that provides the complete package outlined above. We already have some pioneer companies using the facilities, and they have started on their adventures in this rapidly expanding economy. We have more in the pipeline, with fifty applicants to be assessed, and room for a further fifty in the present building. When the new building opens, we will be able to off er our services to 200 European companies. And that is only the start.

Already we are planning an EU Tech Centre in the Middle East, and at the same time investigating possibilities in Africa and South America. We are new. We are only at the beginning. But our merchant ancestors had to start somewhere, and they still decided after three hundred years that it was worth staying in the game when they committed to rebuilding the Fondaco dei Tedeschi on the Grand Canal in Venice. We can salute them across the centuries and applaud the past for showing us the way to the future.

Florian Frhr. von Tucher
Chairman,
EU Tech Chamber.