1. Business internationalization:
Setting up a business in China
Case study
September 27th of 2012, Barcelona
Marcos Briseño
International Director
Applus+ LGAI Division

2. 00 INDEX
CASE STUDY
SETTING UP A BUSINESS IN CHINA
01. Applus+ Group Highlights
02. Chinese Market
2.1 Entry Barriers
2.2 Industrial Areas
2.3 Selling in China
2.4 Purchasing in China
03. Applus+ LGAI Case Study
3.1 Applus+ LGAI in China
3.2 Implementation Plan
3.3 Market identification
3.4 Location
3.5 Legal entity
3.6 Staff hiring

3. 01 HIGHLIGHTS

4. 02 HIGHLIGHTS
Applus+ AT A GLANCE
Applus+ is one of the world's
leading companies in Testing,
Inspection & Certification
It provides solutions for
customers in all types of
industries to ensure that their
assets and products meet
quality, health & safety, and
environmental standards and
regulations
1.1

5. 02 HIGHLIGHTS
KEY FIGURES
Revenue: €1,208 million in 2011
14,800 staff
Present in more than 65 countries
across all continents
Head office in Spain
Owned by:
The Carlyle Group 70%
Spanish saving banks 23%
Others 7%
1.2

6. 02 HIGHLIGHTS
GEOGRAPHICAL PRESENCE
1.3

7. 02 CHINESE
MARKET

8. 01 CHINESE MARKET
ENTRY BARRIERS
MARKET ENTRY BARRIERS
Social
Cultural
Language
Trade regulation & taxes
Laws
Legal entities
Investment
Intellectual property rights
2.1

9. 01 CHINESE MARKET
INDUSTRIAL AREAS
CHINA MAIN INDUSTRIAL AREAS
East Coast:
Hebei (Beijing / Tianjin)
Shanghai
Jiangsu (Nanjing / Suzhou)
Zhejiang (Ningbo / Hangzhou)
Guangdong (Guangzhou / Shenzhen)
Interior provinces:
Sichuan (Chongquing)
Hubei (Wuhan)
Shaanxi (Xian)
2.2

10. 01 CHINESE MARKET
INDUSTRIAL AREAS
PROVINCE INDUSTRY
Shanghai Petrochemicals, chemicals, pharmaceutical,
automotive, electronic appliances, financial
Beijing IT, communications, electronics
Guangzhou Automotive, electronic appliances, textiles,
apparel, toys, petrochemicals, chemicals
Jiangsu Chemicals, textiles, communications, steel,
petrochemicals, food, auto parts, biomedicine
Shenzhen IT, semiconductors, biomedicine,
communications, electronics information
Zhejiang Light industry, plastics, textiles, apparel, toys,
metallurgy household electrical, furniture,
kitchenware
Shandong Agricultural, oil & foodstuffs, pharmaceutical
2.3

11. 01 CHINESE MARKET
SELLING IN CHINA
PRODUCTS COMPLIANCE IN CHINA
30 – 60 days 60 - 90 days
Done by accredited labs Done by governmental chinese
It allows self-certification or labs (only 9 accredited labs)
certification by third parties Only Chinese entities can issue
Based on European Standards the CCC
Part of the testing could be Requires large number of tests
performed out of Europe and related documentation
CE Marking applies to over 3,500 The follow-up audit should be
certified products. (ie. for performed every 3, 6 or 12
construction products it applies to months
over 600 products. High cost
CCC marking applies to 380
2.4
products, grouped in 22 categories

12. 01 CHINESE MARKET
PURCHASING IN
CHINA
ENSURE QUALITY ACRROSS YOUR SUPPLY CHAIN
Before producing
SUPPLIERS Suppliers selection, audit & homologation
MANUFACTURING During production
PROCESS CONTROL Witness tests, online inspection
After production
QUALITY CONTROL
Quality control, loading supervision
Before exporting
CERTIFICATION
Compliance testing and certification
Customs requirements
INSPECTION
Pre-shipment inspections, certificates of conformity
2.5

13. 01 CHINESE MARKET
PURCHASING IN
CHINA
TECHNOLOGICAL CONTRASTS: ENVIRONMENTS
Empty factories Full occupation
2.6

14. 01 CHINESE MARKET
PURCHASING IN
CHINA
TECHNOLOGICAL CONTRASTS: EQUIPMENT
Old equipment High tecnology
2.7

15. 01 CHINESE MARKET
PURCHASING IN
CHINA
TECHNOLOGICAL CONTRASTS: PROCESSES
Non-specialized Productivity oriented
production processes processes
2.8

16. 03 APPLUS+ LGAI
CASE STUDY

17. 03 CASE STUDY
APPLUS+ LGAI
Applus+ LGAI BUSINESSES IN CHINA
Quality Product Product &
Testing Systems
control development
certification
 Food & Agriculture  Aerospace Defense & Transport  Electric & Electronics
 Consumer & Retails  Automotive & Auxiliaries  IT & Telecoms
 Chemical & Farma  Renewals & Energy  Engineering
3.1  Construction &
Equipment
 Industry & Production  Governments & public
bodies

18. 03 CASE STUDY
APPLUS+ LGAI
FROM HUMBLE OFFICES TO LARGE FACILITIES
2006 – 2008: Changning / Zhongshan Park, Shanghai
 HQ located in the city centre
 2008 - 2010: Zhang Jiang
Hi-Tech Park, Shanghai
 New and largest HQ offices
 Technology cluster
 Proximity to customers
 2010 - Present: Nan Hui, Shanghai
HQ Offices & laboratories
3.2 Industrial park
Proximity to local and international customers

19. 03 CASE STUDY
APPLUS+ LGAI
EXPANDING OUR NETWORK IN CHINA
 2006 : Shanghai
 2007: Ningbo + Shenzhen
 2008: Hangzhou + Suzhou
 2009: Zhongshan + Beijing
 2010: Dongguan
 2011: Lanzhou
3.3

20. 03 CASE STUDY
APPLUS+ LGAI
IMPLEMENTATION PLAN
 Market identification
 Location selection
 Government policies and regulations
 Legal entity form selection (Finances , insurances
 Staff Hiring
 Investment / equipment
 Quality system
 Operation starting
3.4

21. 03 CASE STUDY
APPLUS+ LGAI
MARKET IDENTIFICATION
 What kind of business will you launch in China?
 Which customers are you targeting? B2B or B2C
 What will be your market coverage and segmentation?
Applus+ LGAI experience:
We started working in China in 2003 to support our customer in their
operation in China (supply chain delocalization).
The 1st and 2nd years : mainly working for Spanish and
European customers
The 3rd year : starting to sale our services to domestic market
3.5
Today, over than 75% of revenue comes from Chinese market

22. 03 CASE STUDY
APPLUS+ LGAI
LOCATION SELECTION
What is more critical for your business : proximity to customers or
to suppliers?
Will you need to ship your goods?
 What kind of facilities will require your business?
Applus+ LGAI experience
 We started in Shanghai: the economic capital of China
 We hired qualified to highly staff to perform our services
 We benefit from Copca ( ACC1Ó) information and networking
3.6

23. 03 CASE STUDY
APPLUS+ LGAI
CHOOSE THE APPROPRIATE BUSINESS STRUCTURE
 Do you need to have a partner in China?
JV (Join Venture) Vs WFOE (wholly foreign owned enterprise)
 Which size and coverage should have your company in China?
Applus+ LGAI experience
 We opted for the a WFOE : easier for future investment in
equipment and laboratories .
 Today, we have a WFOE in Shanghai and branch offices in different
provinces
3.7

24. 03 CASE STUDY
APPLUS+ LGAI
STAFF HIRING
 Which personal profile do you need for your business?
 How qualified and experienced must be your staff?
 Do you need bilingual staff?
 Which position will cover with expats and which with local staff?
Applus+ LGAI experience
At the beginning : The management team was composed by expats
who knew Applus+ services and culture.
Local employees for sales and engineering positions
Personnel turnover can be a serious issue: Many opportunities in
3.8 Shanghai labor market for bilingual and skilled workers.

25. THANK YOU VERY MUCH!!
01 HIGHLIGHTS
Marcos Briseño
International Director
Applus+ LGAI
mbriseno@appluscorp.com
M: +34 686 514 280
www.applus.com