c/o Teollisen yhteistyön rahasto Oy (FINNFUND)
P.O. Box 147
00181 Helsinki - FINLAND
tel: +358 9 348 434 (please ask for Finnpartnership)
The electronics and automation company Technion has built a network of subcontractors in China with the support of Finnpartnership.
Technion Oy specialises in design, manufacture and after-sales service in the fields of electronics and automation. In recent years, it has experienced its strongest growth in the international markets. According to Managing Director Markku Laaksonen, it was clear that the company would eventually have to investigate the opportunities China has to offer.
“Many of our main customers had already set up production in China. So, we also had to start thinking about how we could be present in the country,” says Laaksonen.
The company, which is based in Raisio, Finland, considered its China strategy carefully, as establishing itself in a new country would be a considerable effort for the small to medium-sized enterprise with 45-50 employees. Laaksonen noted that absence from this high-growth market would have been an even greater risk however.
At first, Technion subcontracted single assignments to China. A significant step was taken in 2008 when the Finnish company established an office in Suzhou, approx. 80 kilometres west of Shanghai.
The office will be used as a bridgehead for sales and marketing, but its key function will be to manage the network of subcontractors built up in China.
At the establishment phase, the world economy was already showing signs of decline, so the company decided to start with a small organisation. Technion currently only has two employees in China, but the company’s orders provide work for dozens of employees at the subcontractor companies.
“Instead of setting up our own production, we wanted to start operations via a network of subcontractors. This turned out to be a good solution. When volumes increase, we will be able to be flexible in expanding our organisation.”
Technion’s products include tailored control system solutions, special cable series and other special products that can be used in demanding conditions. Their customers consist primarily of companies that manufacture industrial vehicles, and construction machines and equipment. Their delivery methods are system deliveries, contract deliveries and contract manufacturing.
According to Laaksonen, the company’s core expertise is based on flexible and efficient design and manufacture of products. The company works in close cooperation with its customers.
These principles also apply in China.
“Quality is essential. We inform our partners of the requirements for the products and materials, for example, when they are designed to be used in the control systems of construction machines operating in demanding conditions.”
Technion received support from Finnpartnership for the preparation of the China project and for transferring the technology. According to Laaksonen, in practice, this involved identifying cooperation partners and their training.
“The selected subcontractors have been acquainted with the technology and expertise required to manufacture the products that we order. Finnpartnership’s support has played a significant role. Our China project would probably have been delayed – or even cancelled – without this support.”
Laaksonen stated that the establishment in China was largely successful, although the original timetable was not met.
“Legislation and bureaucracy take their time. Finding the right partners is also challenging. Operating in China means continuous learning.”
The greatest challenge, however, was to commit customers to future cooperation. Laaksonen emphasises the importance of customer support to a small to medium-sized enterprise that is expanding to a new country.
“The current economic situation has probably partly contributed to the reluctance of customers to make commitments. For us, however, it is very important to be able to agree, to some extent, on timetables and frameworks for future deliveries.”
In China, Technion will need to meet the challenge of local competitors.
“We cannot compete with Chinese suppliers on price. Our assets are reliability, high-quality service and flexibility. I believe that customers will appreciate the added value that these offer.”
Laaksonen hopes that Technion will be able to serve its customers in China even better in the future and also deliver a wider variety of comprehensive solutions.
This requires the network of subcontractors established in China to function effectively.
“Reliability and quality are our top priorities. Our customers expect work to be done as agreed and on time.”
The global depression is apparent in capital goods in China. The decline in orders has also had a negative effect on Technion’s volumes.
“We have not quite reached the expected growth figures. Nevertheless, we have achieved a satisfying level of growth in China. I believe that the growth will recover earlier in China than in Finland. This will give us new impetus.”