European chamber GM: setting up SZ office a smart choice

This is the 10th of a series of reports on expats sharing their stories with the Shenzhen Special Economic Zone, which celebrates its 40th anniversary this year.

Fourteen years ago when she was offered a chance to move to another city after spending two years in Nanjing, capital of East China's Jiangsu Province, Francine Hadjisotiriou, currently general manager of the European Chamber South China Chapter, selected Shenzhen after some online searching regarding education for her two children.

"After checking out websites of international schools, we saw a modern city with palm trees and swimming pools and we immediately said 'yes,'" recalled the Frenchwoman, who has lived in Shenzhen ever since.

In 2006, the European Chamber South China Chapter only had one office in Guangzhou, and Hadjisotiriou had to commute between Guangzhou and Shenzhen frequently. A year later, she decided to establish the Shenzhen office after seeing the potential growth of foreign investors and enterprises in the city, and she was right.

"When I first arrived here, there were very few business organizations that had a Shenzhen office," she said.

"As I was living in Shenzhen, I had the opportunity to meet aspiring entrepreneurs and businesspeople from big multinationals, which made me decide to open the Shenzhen office, and I think it was a smart choice." Since Shenzhen issued the first business license for a foreign-funded company in 1981, more than 90,000 foreign firms have been established in the city, with a cumulative contractual foreign investment of nearly US$300 billion and the actual use of the foreign capital exceeding US$100 billion.

"Take the European Chamber South China Chapter as an example, we have around 300 member companies in the South China Chapter. A third of them set up companies in Shenzhen. 43.2 percent are manufacturing companies, over 20 percent of which have set up R&D centers in Shenzhen," explained Hadjisotiriou.

Regarding R&D centers, Hadjisotiriou said that 10 years ago some companies were reluctant to establish R&D centers for fear of IPR infringement.

"However, the trust has grown, and the companies understood that there are a lot of benefits to have an R&D center in China. The overall situation regarding IPR has improved tremendously in China, even though a lot of progress is still needed," said Hadjisotiriou.

For Hadjisotiriou, what attracts foreign companies to come and settle down in Shenzhen is its dynamic business environment, which is in part due to the unique DNA of the city with young people from all over China.

"Their positive mindset, their can-do attitude, their determination to achieve and willingness to go the extra mile, are really important. These create the whole Shenzhen ecosystem with a lot of startups and smart manufacturing. The young people also bring dynamism to the company they work for," said Hadjisotiriou.

"What also shapes the business environment are the clarity and predictability of regulatory measures, as well as the support of the Shenzhen government to companies, both multinationals and small and medium-sized enterprises (SMEs), when they face challenges. This is what the European Chamber is addressing to the government, as the economy always benefits from an improved business environment. With the economic downturn due to the pandemic, many SMEs have suffered, especially the service sector. Many have closed down, which could have been prevented," added Hadjisotiriou.

Hadjisotiriou delivers a keynote speech at the UN Women event on the topic of Women Entrepreneurs Digital Empowerment. 

Despite increased challenges, most companies remain committed to China. According to the European Chamber Business Confidence Survey 2020, in South China, 83 percent of the members would choose South China to expand their current businesses and 88 percent of respondents expressed their commitment to South China over the coming three years.

According to Hadjisotiriou, over the years, the total investment of European enterprises in Shenzhen has increased while the total number of enterprises continuously decreases. 

"Smart manufacturing and innovative companies are in the right place and are investing further. They find the benefit of operating in the Shenzhen ecosystem. Companies that are not innovative anymore are leaving, because if they don’t bring something outstanding, they would face competition by Chinese companies that provide similar products at a cheaper price."

Hadjisotiriou delivers opening remarks at the launching ceremony of the European Chamber Business Confidence Survey 2020.

Another noticeable change regarding companies is that, back in 2006 Shenzhen had more trading and sourcing companies focusing on exports, but now more and more companies are working in China for China, as domestic consumption has increased dramatically.

Hadjisotiriou feels quite fortunate to have spent 14 years in the city and to have been able to witness the change and to be part of it. "The living environment in Shenzhen has improved immensely: more cinemas, sports centers, parks and shopping malls, more places for art exhibitions like in OCT Loft, more public transportation, and more green areas which make the city quite pleasant to live in."

She highly recommends people visiting Shenzhen to go to Huaqiangbei, as the area provides a great illustration of how things can be done fast and well here.