Production, Sourcing and Sale in China

Creating a Chinese Foothold – the Case of Nilfisk-Advance
Jørgen Jensen, President and CEO of Nilfisk-Advance, spoke about the company’s ambition of being a leading global player in the field of professional cleaning equipment, which also means having a leading position on the Chinese market. The battle for the growing Chinese market is on, and Nilfisk-Advance is expanding its influence through a number of acquisitions, the first of which dates back to 2003. The company’s target of reducing their production costs by 40% by moving a large share of its production to China has already been reached in some areas, yet at the same time the company has managed to retain the high quality of its products. Mr. Jensen also talked about overcoming the “China fear” present even in large Danish companies and stressed the importance of small, carefully measured steps in preparing for the “plunge.” He made it clear that to be a winner on the Chinese market, one has to produce in China as well, making use of local sub-suppliers. Another factor for the company’s activities in China is the need for attracting talents that are interested both in career objectives and in working with the Chinese market.

Myth and Reality of Production in China
Lars Gjødsbøll, EVP Production and Sourcing, Nilfisk-Advance, described in detail the three facilities Nilfisk-Advance has in China and their history. He specifically discussed a handful of concerns that many Danish companies tend to have prior to moving their production into the Chinese market. Among these were concerns about quality, productivity, employee turnover and the Chinese legal environment. Mr. Gjødsbøll talked about how Nilfisk-Advance dealt with each one of these challenges and mentioned the fact that some of them are rooted in a different mentality of the Chinese people as opposed to that of their Western counterparts. He thus underlined the importance of investing both time and effort into communicating with one’s Chinese employees, learning about their ways of thinking and creating a friendly working environment for them.

Realizing the Full Potential of Chinese Sourcing
Peter Schack Hansen, Director of Global Sourcing, Nilfisk-Advance, dwelled on the issue of managing Chinese suppliers for Nilfisk-Advance’s components. The company started to use Chinese sub-suppliers in 2004, and even though it was somewhat of a bumpy road in the beginning, this undertaking has slowly proved to be a success. Nowadays, 75-88% of Nilfisk-Advance’s components are supplied by Chinese companies, and they fully comply with the highest standards set by the company’s engineers.

Getting Positioned for the World’s Largest Market for Professional Cleaning Equipment
Finally, Mr. Jensen’s closing remarks were dedicated to the challenges Nilfisk-Advance faces in the next few decades on the potentially huge Chinese market for professional cleaning equipment. The company’s sales in China so far have not been significant compared to their other markets, but it is a 60 million EUR market, and the possibilities for Nilfisk-Advance to be at the leading end of it are very real. China is therefore expected to become their largest market outside the US in near future.