From Rio de Janeiro to Shanghai - My first experiences with China

Good morning all You readers of my posts and followers of my blog. Today I will give You some insights in my first experiences as traveller to China and doing business there. 

My first travel to China goes back to Abril 2014. After an extremely tense, exciting but also exhausting negotiation period of several months and a final full deal closing week at a hotel in Rio de Janeiro, I brought home to our company the biggest contract, which my company had ever negociated with a single customer until then since the start of its brazilian operations about 40 years earlier. The net contract value was about 80 million Reais. 

This was during my last year as Managing Director of GEA Heat Exchangers do Brasil (now Kelvion:  https://www.kelvion.com/br/) at Franco da Rocha, Sao Paulo. We gained the contract for the construction and delivery of practically all shell & tube heat exchangers for the two deep sea oil platforms P75 and P77 for Petrobras. Our customer was a Brazilian oil & gas EPC (Engineering Procurement and Construction) company in Rio de Janeiro. 

After the final approval of the GEA HX board in Düsseldorf, Germany, for my contract signature and my to return to Sao Paulo after the wonderful contract signature party together with several colleagues and representants of the customers at Rio de Janeiro, I started to get quite nervous and sweating. 

The contract had been negociated so tightly, that not a single flaw during the execution of this huge contract could be admitted. Failure was definitely not an option for us. The profit margin of this contract was very low, but anyhow this contract was extremely important for us and the big challenge for all of us was now, to find quickly smart and secure solutions for the reduction of our manufacturing costs.

One of the cost reduction potentials for us was to find better purchase offers for all the raw materials which we needed for the construction of the in total 60 big heat exchangers. 

Together with our Purchasing Manager - I will present him in a future post -  I decided, to fly immediately to China for checking personally out some very attractive offers from chinese suppliers for seamless stainless steel tubes and forgings, which made a great part of the material costs for the heat exchangers. Our negotiations were about the purchase of materials for several million US Dollars. All but “peanuts” business!

My learnings and great impression about China started already upon my first arrival at Shanghai airport. Everything over there was much bigger, much more modern and much more beautiful, than I had imagined until then. 

To be frank and true. Until then my experience with and knowledge about China was almost zero. When I was a small boy, one of my grandfather’s old, heavy books excited me. It was from the 1920´s and explained the several thousands years old history, economy and culture of China until then. But for sure this had already nothing to do with modern China, when I had glances into this book during the early 1960`s. My next experience with China was around 2010. During that time I participated in an event in Sao Paulo, where consultants showed the strongly rising economical relationship between China and Brazil. By the way - just these days I read in one of the economic journals, that the Brazilian exports (mainly commodities, iron ore, soy beans, ....) to China have risen since 2000 until 2020 from almost zero to more than 30% of the total Brazilian exports. Very impressive, isn`t it?

During two weeks my colleague and I travelled to several distant cities in different Chinese regions and visited lots of companies. I saw everything which You can imagine as industry dated between the middle age and the year 3000. But I made lots of incredible experiences, almost always together with wonderful, friendly, open people. 

In the end we found excelent high quality suppliers with favorable prizes for all the materials which we had been looking for. To be true, this was just an initial "pathfinder" tour. A few weeks after this travel I returned to China together with our Quality Manager and we deeply audited all initially chosen suppliers. With the ones which passed successfully our audits we signed immediately contracts and from then on until the release for the deliveries of the ordered materials to our factory in Brazil our quality inspectors visited these suppliers several times for doing intermediate inspections and quality gate releases before we allowed the shipment of the materials to Brazil.

What I can confirm sincerely and proudly to You is, that we did not have a single issue with the materials beeing delivered to us about 9 months later by our new Chinese suppliers. The quality was 100% perfect and all deliveries were exactly as scheduled from the beginning on. This contributed massively to the great technical and commercial success of this very important - for GEA Heat Exchangers do Brasil, our EPC customers and finally Petrobras.

The city which really deeply impressed me was Shanghai, where everything was so terribly big, new, beautiful and fancy. During my later trips to China I also had the chance to visit as well Beijng, the Great Wall and several other beautiful historical cities and places. But for sure, I would never dare to say, that I know China. This country is so big and full of so quickly changing places, culture and history. I personally am totally convinced, that You would need at least 3 years of permanently living there, before You could really say, that You "know" (most probably still just a little bit) this country. 

What I found quite strange when I was living in Mexico, was the saying of a German colleague, who visited me from China, where he lived since a couple of years at that time, and who had also lived in Mexico several years before. The guy told me "You can come back to Mexico City after 10 years and almost everything looks the same, but if You come home to Shanghai or any other important Chinese city after 4 weeks, You will be surprised, because lots of things have changed impressively". 

This was during 2005. I am sure that my colleague was not lying, because this obviously still was during the very fast development and massive construction and heavy investment times of China. I am not sure, whether my former colleague would see it the same way still today, but no doubt, the dynamic of live and development of the chinese economy are breathtaking still compared to Latin America, where I have been living at different places in several countries since meanwhile almost 20 years. 

I will come back to China in future posts for sharing some more particular personal & professional experiences with You, which I find very interesting and which made me learn a lot. 

By the way - the Vulkan Group has a beautiful and highly efficient manufacturing plant in the Chinese city of Wuxi (https://www.vulkan.com/en-us/holding/vulkan-companies/china), about 2 hours by car away from Shanghai, from where my colleagues attend the Chinese market and from where they also export their products within our internal Vulkan Group supply structure to many other Vulkan Group sales subsidiaries in many other countries in the whole world. 

But for now I will finish my todays post and wish all of You a great successful day. Remember, today is friday !