In recent months, China has begun to invest more heavily in Central and Eastern Europe.  As Spiegel has reported: ”Last month, at the April 26 China-Central Europe-Poland Economic Forum in Warsaw, Chinese Prime Minister Wen Jiabao announced the creation of a $10 billion credit line to support Chinese investments in Central European infrastructure, new technology, and renewable energy.

Indeed, as the New York Times reported in April of this year, Wen stated that China wants to double trade with the countries of Central and Eastern Europe to $100 billion a year by 2015.

Beyond investment, Wen has pledged $500 million in funds to be made available to Chinese companies seeking to make first-stage investment in the region.

The region straddles the European Union and includes Poland, Croatia, the Czech Republic, Lithuania, Serbia, Slovakia, Hungary and Bulgaria, among others.  Indeed, as the New York Times reports: “Trade between China and the countries of Central and Eastern Europe has grown by 32 percent annually over the past decade, to $41.1 billion in 2010″, citing the Chinese Ministry of Commerce.

“The credit line is only one of a number of major China-related developments in Central and Eastern Europe in recent months”, reported Spiegel. “Shortly after Wen’s trip, Chinese Deputy Prime Minister Li Kequiang also traveled to the region, announcing a string of deals, including a $1 billion credit line to Hungary for the construction of a Chinese-built rail line to the Budapest airport. Chinese shipping giant Cosco has also said it is considering investing $1 billion to develop the port of Rijeka, Croatia.  And earlier this year, in February, Great Wall Motors, a Chinese automobile manufacturer, began production at a new plant in Bahovitsa, Bulgaria.”

Where Central European Service Providers can win new business among Chinese companies

“Central Europe means access to Europe,” according to Eberhard Sandschneider of the German Council on Foreign Relations (DGAP) in Berlin, as reported in Speigel.  [However, and importantly]:  ”Chinese investors will [need] to adapt to the local market. [Including] adapting to local laws.”  And this is where the opportunity lies for Central European Investment Banks, Accounting Firms, Management Consulting Groups, Law Firms and others.

Chinese investment is a tremendous economic boost to Central Europe, however what is needed is the local knowledge and assistance of those with an expertise in local laws, business practices, taxation – and the commercial insights to guide Chinese corporate management teams toward shrewd acquisitions, succesful local management strategies, legal compliance, EU government contracts (access to which by foreign companies is an issue presently being discussed within the European Commission – but which has yet to be decided) and a host of other solutions, strategies — and opportunities — that any new market entrant would need and seek when doing business in Central Europe.

With this in mind, Central European professional service providers should now be actively creating tailored business development plans focused on China and those investors and corporate management teams from China who will be seeking opportunity in your respective countries.

A well thought out plan would include:

  • Identifying your strengths and what you can best offer Chinese companies seeking to expand in Central Europe;
  • Making yourself a gateway to your respective markets;
  • Researching and identifying Chinese companies seeking to do business in Central Europe;
  • Reaching out to those companies and investors in an organized and efficient fashion;
  • Establishing a social media presence to attract those Chinese companies who might not have known about you otherwise;
  • Establishing effective, business development-focused referral and best-friend relationships with Chinese investment banks, law firms and other professional service providers within China;
  • Developing and nurturing ties with national, regional and local trade organizations within China;
  • Consider opening a cost-efficient business development office in China;
  • Ensuring you know how to convince your potential clients of your unique abilities to help them secure new business in your country or region;
  • Importantly, small and medium-sized professional service firms can and should compete for business among new Chinese entrants to the Central European market;

China’s plans for substantial economic engagement in Central Europe is a tremendous, long term opportunity for professional service firms commited to establishing and maintaining a truly effective business development effort aimed at identifying and assisting new market entrants to the region from China.  However, any plan to do so must be well thought out, as well as implemented and managed properly – to succeed.

Posted by John Grimley

John Grimley edits and publishes Asia Law Portal and is the author of A Comprehensive Guide to the Asia-Pacific Legal Markets. He specializes in providing writing, editing, research and strategy services to the corporate and professional services sectors. Between 2002 and 2008, he established and directed the European representative business development office of US AmLaw 100 law and public policy firm Patton Boggs LLP. At the inception of his career, he served as a writer to the President of the United States in the White House. A licensed American lawyer, he holds a Juris Doctor from the University of San Diego School of Law.

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