Swedish Town Learns Chinese, Clawing Back Jobs Lost To The East

Jonas Bergman, Bloomberg, May 14, 2007

Ping Sun currently serves one Chinese dish at her restaurant in the Swedish town of Kalmar. She’s about to add more to a menu dominated by local classics such as potato pancakes, lingon berries and meatballs.

Sun and 61,000 fellow residents of the Baltic Sea city are preparing for an influx of more than 1,000 Chinese who will work at a trade center selling goods ranging from textiles to toys. Backed by Hangzhou-based Fanerdun Group and scheduled to open in September, the 1 billion kronor ($150 million) project will also bring 700 new homes and a 280-room hotel to Kalmar.

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Kalmar’s new Chinese accent underscores how the world’s fastest-growing economy is having an economic impact in unlikely outposts. The city lost 10,000 jobs over the past decade as Electrolux AB and Bombardier Inc. shut factories and moved production east, turning Kalmar into a “a region in crisis” according to a 2004 government report.

Now Chinese companies are priming a recovery. The communist nation was the biggest source of venture capital arranged by the Invest in Sweden agency last year, funding 32 of 193 projects.

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Fanerdun owner Luo Jin-xing, whose Hangzhou office said he wasn’t available for an interview, is seeking to replicate the wholesale center in his hometown of Yiwu, where some 160,000 people sell wares at China’s biggest consumer products market.

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Representatives from the city wooed Luo at a conference in Zhejiang province in September 2005. Kalmar got the nod because it’s in the middle of the Baltic region, helping Chinese companies reach retailers “as quickly as possible,” Qian said.

“There are many rich Chinese businessmen who want to develop their businesses abroad,” she said. The companies will pay the equivalent of about $45,000 to buy space at the center.

Learning Swedish Ways

Chinese businesses are expanding abroad as competition at home increases and the government urges companies to make investments overseas. China’s economy grew 11.1 percent in the first quarter from a year earlier.

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Swedish imports from China last year increased 29 percent to 29 billion kronor, more than twice the rate of total imports. Chinese immigration to Sweden rose 12 percent 1,749 in 2005, according to the latest available data from Statistics Sweden.

For Kalmar the project is both an economic and a cultural experiment. The government hired a Chinese interpreter, and has set aside six different areas for new residential developments so as not to group the Chinese in one area.

Fanerdun will invest an additional 21 million kronor to start an airline that will handle anticipated increased traffic between Kalmar and China, via Stockholm. Today, Kalmar airport’s security guards do double duty manning a magazine and candy stand in the evenings.

‘The Right 1,000’

There will be no shortage of candidate companies for the Kalmar facility, said Hans Jansson, a professor at University of Kalmar’s Baltic Business School who specializes in Chinese and Asian business. He notes that Chinese companies are building similar trading centers in Europe, including one planned for Schiphol airport outside Amsterdam.

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