Chapter 21 CEO Living Room: A Conversation with Pan Ruirong

◎Zhang Feibing: What kind of considerations did you take Hamburg as your choice? ◎Pan Ruirong: The predecessor of our company was the Shanghai Department of the China-Europe Trade Promotion Center, which later served as a platform for Shanghai to trade with Europe.At that time, foreign trade was not yet open, there were restrictions on foreign investment, and it was not possible to set up representative offices and trade institutions outside.And Hamburg is a bridge and gate for China to enter Europe. At that time, many foreign trade companies in Shanghai were stationed in our company, using this platform to conduct trade with the whole of Europe. For example, China Shipping was originally established as a department in our company. , and now it has gone out independently and become a very large company.

◎Zhang Feibing: Shanghai has already exported products with certain technical content to Hamburg.Are there any high-end, high-tech products? ◎Pan Ruirong: It seems not yet.But I know many companies are groping their way.Chinese traditional Chinese medicines, such as Ganoderma lucidum, have a certain Chinese tradition, and the medicines with technical content are all being applied to Germany. ◎Zhang Feibing: More and more Chinese companies invest in Hamburg.In the past, Chinese restaurants were mostly used by Chinese people abroad. Has there been any change in the industry structure? ◎Pan Ruirong: For example, there are two companies in Shanghai that really invested in Germany.One is a steel cylinder factory, and the other is Shanggong DR Company.Looking at it now, in some domestic industries such as medicine, machinery manufacturing, ship parts, etc., many companies have the idea of ​​investing in Hamburg, but there is still a process to do it, and it is not so easy.

◎Zhang Feibing: What is the main problem? ◎Pan Ruirong: Our domestic enterprises are generally not familiar with foreign investment business.Still in the process of exploring and learning.I will give an example.Our country's foreign exchange management department doesn't know how to get your money out when you invest abroad.As far as Shanggong is concerned, it is not very clear about the procedures to fight for a foreign exchange quota, including future bank guarantees.I don't know what to do with the materials submitted to the German side. It is not enough to rely on the company alone, and it must cooperate with very professional companies and institutions to succeed.As far as China is concerned, domestic M&A experience is available, but international M&A is much more complicated, and it is very difficult for an enterprise to do it on its own.

◎Zhang Feibing: Do you think the government can do something to help Chinese companies solve these problems? ◎Pan Ruirong: I discussed this issue with some banks and some investment companies in Shanghai.In the past, we only told Chinese companies how to purchase German companies according to German laws and regulations. In fact, this alone is not enough.They have to be told how to organize a team, and they can only do it when the team is organized.More importantly, the enterprise has to integrate it after buying it back.To integrate it, first of all, there are very high requirements for the new and old teams of this enterprise. Is there a common legal language, financial language, technical language, management language, including the views on the market? Is there a common market language?If there is no good communication in these five areas, this kind of acquisition is very dangerous.Therefore, when an enterprise invests abroad, it not only needs a good overall business plan, but also needs an excellent international team that can realize this business plan, which needs to be cultivated.The government can do this.This can greatly promote the development of foreign investment.Otherwise I fear many problems will arise.For example, Chinese enterprises produce according to Chinese enterprise standards, while German enterprises follow German standards.In the process of mergers and acquisitions, it is nothing more than combining our strengths with those of the German side. However, if the two parties implement different standards, it is impossible to carry out technological transformation and improvement on a technology platform.First of all, it is necessary to obtain the unification of the standards of both parties, so that the Germans and the Chinese also recognize it.The Germans are very worried that you will make my products worse and ruin my better brand.Chinese companies will also have problems. I used to do very well, but I can’t do this or that when I come to you. I can’t enter the market.This is a very practical question.

◎Zhang Feibing: We also learned that Hamburg has been emphasizing cooperation and exchanges with China.In particular, Hamburg also hopes that more Chinese companies will invest in Hamburg.So far, the Hamburg city government has no very specific measures and policies to help Chinese companies overcome the problems encountered in mergers and acquisitions and investment.For example, provide expert or financial help? ◎Pan Ruirong: This is a very good question.The next thing I want to say is to have a common language of government.I also worked in the government.I found that the way the Chinese government operates is not the same as that of the German government.The German government and the Hamburg government don't care much about this issue; unlike our government, because of state assets, property is originally a representative of government property, and the Hamburg government doesn't have this idea at all.But the Chamber of Commerce in Hamburg and the banks in Hamburg will care about this matter.If the government can pay attention to this aspect, it can integrate various elements, so that it can play an integrated role: universities, banks, especially banks.Now it appears that each small point is very positive, but it has not been integrated into a whole.

◎Zhang Feibing: It means that the various forces have not been integrated into a powerful driving force. ◎Pan Ruirong: Domestic enterprises will not be able to do mergers and acquisitions one by one in the future, especially for small and medium-sized enterprises. The government must have a platform and an investment company. If they come forward as the main professional team to do it, the success rate will be relatively high .The rest of the M&A process is the difference between the two systems.Mergers and acquisitions of many companies in Germany are carried out through bank auctions.This system and method cannot adapt to Chinese enterprises at present.It takes a long time to establish a project and get approval. I think it is impossible for a Chinese company to do this alone, but it is possible to use a government-invested company as an intermediary and a platform to acquire it.You are the specific buyer, but the operation of the entire capital cannot be realized.I have seen several good opportunities, but in the end none of the Chinese companies made it.

◎Zhang Feibing: What do you think is the prospect of large Chinese companies investing in Hamburg? ◎Pan Ruirong: The key depends on what to do. ◎Zhang Feibing: Where do you think the opportunity is? ◎Pan Ruirong: I have also thought about the location advantages of the city of Hamburg?The advantages of Hamburg's location are, first, it is a port city, and there will be opportunities for cooperation in logistics and ports.The travel agencies in Hamburg are well developed, and we can see that Zhonghai Zhongyuan is doing relatively well, which reflects such a structure.Second, Hamburg is also an international integration site for APIs.

◎Zhang Feibing: API? ◎Pan Ruirong: API.Chinese medicine, western medicine.And herbs, and more herbs. ◎Zhang Feibing: The whole of Europe? ◎Pan Ruirong: The whole of Europe.Not many people know about this.This will have great cooperation with China, which is a big country of herbal medicine.Chinese herbal medicines now have problems with heavy metal content.This can be solved by technical means.The relatively good purification technology in Germany can also help solve this problem.Many state-owned enterprises and private enterprises are concerned about this issue and pay attention to this market.More than 20,000 herbs are used in Germany every year.This is also a great opportunity.

Thirdly, Germany is also a place where wind power technology is concentrated, and there will be good opportunities for China's wind power technology.Of the world's largest wind power companies, maybe seven out of ten are in Germany.The main ones of the seven are concentrated in Hamburg, north of Hamburg.This is an opportunity for Chinese companies that want to develop wind power. Fourth, some supporting technologies for ships.It is clear that German ship technology is shrinking.It is Europe, especially Germany, that is likely to transfer this technology to China.Japan and South Korea are also big shipbuilding countries, and they are very closed to us. It is impossible to cultivate competitors.I also discussed this issue with the president of the Ship Parts Association.They feel that Dalian, China is very active, and conversely, Shanghai is not enough.As far as Shanghai itself is concerned, as a national strategy, it is the assembly base of China's high-tech ships, and 70% to 80% of the core technology of ships must be imported.

In addition to opportunities for cooperation in logistics, raw materials, herbal medicine, wind energy, and ship parts, there are also many opportunities for cooperation in the relatively advanced technology of environmental protection.And sludge power generation in Hamburg.About 6/1000 of the sewage is sludge, and the sludge is fermented with biogas to generate electricity, then dried and used as fuel to generate electricity, and then the ashes are used as bricks to protect the ground.According to China, it is called zero treatment, without any pollutants.China's sludge treatment and counterparty is a big problem.

◎Zhang Feibing: The sludge can be burned after it dries ◎Pan Ruirong: It contains more calories than garbage, which is equivalent to lignite, which is equivalent to a new fuel. ◎Zhang Feibing: It is equivalent to the fifth point of cooperation in environmental protection technology. ◎Pan Ruirong: Hamburg technology, especially some soft technologies, has not been paid much attention to.For example, most people may not have thought about the management and utilization of sewage pipes, but it is actually a huge resource.Especially when the city's treatment level is improved, there will be a lot of waste in the sewage pipes.Seventy percent of investment in sewage treatment is concentrated in pipelines.The investment in pipelines is definitely much larger than the investment in sewage treatment plants.As for Hamburg, the German approach is more refined.Of course it costs a lot of money.A car specially used to clean sewage pipes may cost 200,000 euros, or about 2 million yuan. ◎Zhang Feibing: This is also a direction that our country is working towards now.We also happen to have an ecological architecture exhibition this year.You just mentioned that the wind energy in Hamburg is relatively advanced.Our companies can go to Hamburg to learn their wind power generation technology, and then return to China to use it, is that what you mean? ◎Pan Ruirong: There are many ways to do this.First is design, then core technology, and management technology.The original idea in China is to buy its license. Some companies want to make some key orders or cooperate with some design companies. There may be many ways. ◎Zhang Feibing: I used to research some information about hamburgers on the Internet, and found it very interesting.There is a saying that if the people of Hamburg are facing a war, instead of being brave and fearless fighters to defend their homeland, they would rather spend money and buy peace with money.In other words, the Hamburger is not a brave man at heart, but a businessman.What do you think the general character of Hamburgers and Shanghainese have in common? ◎Pan Ruirong: They are very open.Hamburgers are more receptive to different cultures.Hamburg's business culture is influenced by the entire European business culture and German business culture, which is more rigorous, more delicate and more specific.Shanghai may experience some influence from China.For example, if a needle falls on the ground, the Chinese solution may be to sweep it with a broom to see if it is swept away.As for the Germans, they will first mark the land into squares, then number them, and look for them one by one, and they will definitely find them.This may be the difference in the solution.Our flexibility and their rigor can complement each other, which is what makes them attractive to each other.This is also the place where people attract each other under the different conditions of different cultural backgrounds. ◎Zhang Feibing: Just now we talked about the economic cooperation among large enterprises and governments.We actually come into contact with small businesses.What do you think are the prospects for their investment in Hamburg, what are the opportunities, or problems to be avoided, or do you have any advice for them?What is their success rate? ◎Pan Ruirong: For SMEs, the investment in Hamburg must be to find what China lacks most.Where Germany has a relative advantage is the manufacturing technology in the several aspects I just mentioned.Small companies in Germany can take a very small problem to the top and reach it.Someone told me three S: the first simple, simple; the second special, special; the third stupid, persistent.Domestic companies follow suit more, doing what they earn money for.This has its historical reasons. China lacks everything, and whoever thinks about it first will definitely make money.China's demand is wave-like. Chinese companies do not specialize, there is no simple, no special, no stupid.In fact, this process will not be very long, and in the end we still have to return to the three S's.If we do three S's, many of our small companies don't have a lot of human resources and capital, so they should actually be companies with three S's.In fact, there were also three cooperatives before Liberation.Don't do everything, but aim at the smallest and sharpest place. If you persist for a long time, you will definitely achieve results.Some family-owned small businesses in Germany, their children may not want to do it, but China has a huge market, and if this kind of cooperation is sure to be a win-win situation.In this regard, I think, first of all, in the way of investment.In the specific industry, there must be grass within ten steps, and there will be opportunities everywhere, as long as you are the best in this industry.If you persist in an industry for ten years, you can become an expert in this industry.You want to limit your scope very small.For example, there are so many counterfeit and shoddy products now, if you do anti-counterfeiting technology, if you do a certain amount of anti-counterfeiting technology, you can be promoted. ◎Zhang Feibing: Do we have regular communication and exchanges among some Chinese-funded enterprises in Hamburg?and has it been in what way? ◎Pan Ruirong: Every month we have a gathering of Chinese-funded enterprises in Hamburg to communicate with each other without themes and exchange information.Second, some of our industries are connected. We will play golf in its cultural exchange center or somewhere on Sunday. Golf on Sunday, such as the golf club of Chinese entrepreneurs, is also a way of communication.But relatively speaking, I think that Chinese entrepreneurs should pay attention to, research and learn from some good German culture, and there are relatively few researches on business spirit.On this point, European companies have done in-depth research in China very early. European companies had many associations in China 100 years ago. In addition to doing business, they also need spiritual life. Spiritual life is not only to meet personal needs , but as a cultural introduction.