Memory lane: China, the '90s and black and white mice

Updated: 2012-04-13 13:55

By Fu Jing (China Daily European Edition)

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Memory lane: China, the '90s and black and white mice
Bert De Graeve describes Deng Xiaoping's white-and-black-cat theory as visionary and pragmatic. [Fu Jing / China Daily]

Belgian businessman talks of China's accomplishments, looks to the way ahead

Bert De Graeve saw China first hand when it was at its turning point 20 years ago, and when he talks about the late Chinese leader Deng Xiaoping visiting Shanghai, it brings back abiding memories. De Graeve was CEO of the telecom manufacturer Shanghai Bell and director of Shanghai Belling, a microchip maker Deng visited.

"Though I had no chance shaking hands with him, as a Westerner I was impressed by his white-and-black-cat theory, which was visionary and pragmatic at the same time." (Deng, apparently borrowing a Sichuan proverb, reckoned that it did not matter whether a cat was white or black, so long as it caught mice.)

De Graeve sees Deng as a remarkable historical figure, one who during his famous "Southern tour" in spring 1992 made a series of stirring speeches notable for their plain-spoken pith. They have been used as a blueprint for China, which was then at a critical point in the drive to reform and open up.

De Graeve is now CEO of the Bekaert Group, Belgium's biggest investor in China. Sitting in his office at the headquarters of Bekaert in Kortrijk, in the country's northwest, he says China's development has embodied a "very, very long-term vision" that helps people know exactly where they are going.

"Meanwhile, it includes a very pragmatic implementation," De Graeve says. "You start, you try, you move and you change, something which we industrials admire very much. And the aim is to make progress, to have results."

De Graeve's three years living in China in the early 1990s later helped him gain the CEO position at Bekaert. The company was founded in 1880 in a humble wooden shed with a tarpaper roof and has evolved into a global player with 28,000 employees mainly producing steel wires. Until 10 years ago it employed just 17,000 people, and now employs about 10,000 in China alone. Over the years it has turned itself into a global leader of applications in advanced metal transformation and advanced coatings.

Its expansion in recent years has occurred mainly in China, India and Indonesia. It is a public company, but the Bekaert family still holds 40 percent of its shares.

Bekaert, which has customers in 120 countries, entered China in 1992 when, after Deng's tour and speeches, the company's leaders realized China would open up to foreign investors with preferential policies.

After two decades of rapid development, De Graeve, who joined Bekaert 10 years ago, says China has already become a developed market for his and many other businesses.

Like many executives, De Graeve is cautious about business prospects this year. His biggest concern is with developed markets such as the European Union, where the debt crisis continues to unfold; the United States, which also has huge debts and fiscal deficits; and China, where the government has lowered its expectations for GDP growth to 7.5 percent this year. "To be frank, the business in mature markets is not clear."

De Graeve says elections and leadership changes in big economies such as the US, Russia, China and France this year should be taken into account when business decisions are made. "We need to watch out how these political changes will impact our businesses."

In his view, elections in a very difficult economic situation often drive conservative actions on trade, and the candidates may propagate trade protectionism of their economies.

"That is a very bad thing to do. The world can only go forward if we support trade and growth," De Graeve says, adding that some people tend to want to build walls around their economies.

However, he says the outlook in other regions is bright. "We feel rather conformable in Latin America. Its economies will grow and so does our business there as well. We strongly believe in continuous growth in Southeast Asia, in India, Indonesia. Of course, we still believe in strong growth in China."

De Graeve says being the CEO of a multinational is not easy, but 20 years since he worked in China "the difficulty is the same".

The biggest difficulties derive from misunderstandings, he says. For some things, Europeans believe their point of view is logical and is simple to understand and to agree on. But Chinese may not see the supposed logic. People like to have mutual respect with partners, and it is not just about making money. They want to know each other by talking about who you are and how you think and what you believe.

"For Chinese it is not about going immediately to 'I want to sell this; this is the price and we can sign contracts within one day'," De Graeve says.

He has learned that in such cases a very good interpreter is vital as Chinese are open to many ambiguities. "You have to make sure that what a Westerner says in English is correctly translated into Chinese and vice versa."

He believes Belgium is an ideal destination as China encourages businesses to go out and invest. He says Belgium is close to European decision makers and, as a logistics hub, close to several big ports in France, Germany and the Netherlands. Moreover, it has access to flexible and well-educated workforces throughout Europe.

Europe's strengths lie in the high-tech that plays a part in people's everyday lives. "Apart from the military, which the US is on the top (of), Europe is proud of still having the best cars, best machinery, best clothes, luxury brands and a very, very high standard of living. So the best technological, ecological, social standards you can all find in Europe. If China wants to be a global economic power, (it) should enter into a partnership with Europe.

"Europe is a good model and I am a strong believer in Europe's strength."

But for Europe to succeed, unity is crucial, he says. "If we are able to leverage as one Europe with 500 million people, we can talk to the US, and we can talk to China as equals. Individual countries are all too small. A European union is a power that can play on any level."

As for the financial crisis, De Graeve says Brussels should work faster.

"Nevertheless, we will get there. You can complain a lot, but this is the system we live in. If you move faster you have more opposition as well. If you move too fast, you will get too much objection and you may kill the project."

He says the European Union will continue to correct itself, and there is no other choice. "So by definition, in the long run, they are on the right track as long as they go for Europe."

As for Bekaert, the company's business is global; 15 percent of turnover is being generated in North America, 25 percent in Asia, 25 percent in Europe and 35 percent in Latin America.

"It is international, which is our strength. The company manufactures locally for local markets. We are using local labor for local markets, instead of using cheap labor for exports. Wherever in the world, we are always a locally integrated company, buying raw materials locally, producing locally, selling locally, which is our strength."

However, some of its customers in China are export-led companies. In recent years their businesses have been hit by sagging demand in Europe and North America, less credit has been available from the banks and government incentives have been reduced.

For example, Bekaert supplies wire for solar panel producers based mainly in China, but because fewer solar panels are being bought in countries such as Germany, Italy and the US, principally because of reduced subsidies, the company's sales in China fell to 900 million euros last year from 1.1 billion euros in 2010.

"So our strategy is now to broaden our product portfolio in China," De Graeve says. "Until now, the portfolio was limited."

He plans to expand the company's product offering with steel wires for power lines, elevator ropes and wants to expand the partnerships it already has. "We really want to be a local company by setting up joint ventures, and we are open to an equal participation, or to minority participation, or to majority participation. We can do everything in China."

De Graeve says his company has just finished two acquisitions to expand production and sales in China.

The company survived two world wars and the Great Depression in 1930s, so what is happening now is not the worst his company has faced, he says.

"We have gone through very good periods, and very bad periods and this company survived it all . Our fundamental belief is cooperating with others, and 'better together' is our basic philosophy. We want to make employees, customers, suppliers, all better through working with us."

Recently, Bekaert decided to reduce some operations in Europe and China but it still invests in all regions. "This is about business: you lose some here but you win some there."

fujing@chinadaily.com.cn