Companies will help each other set up and create leading brands

An alliance of private-sector companies will establish offices in Europe to aid and advise other Chinese companies investing in the continent.

The Aigo Entrepreneurs Alliance will see its members move into London and Brussels in the coming months.

One office will be set up in Greenwich, southeast London. The office in Brussels will be based between two business hubs - Tour & Taxis and the European Market City.

Feng Jun, president of Aigo Digital Technology, who founded the alliance in June 2011, said private companies should help each other expand overseas.

The alliance has about 100 members, with many more set to join, including companies that have already set up an overseas presence.

Chinese companies are increasingly investing overseas. More than 13,000 domestic enterprises had invested in 178 countries and regions by the end of 2010, according to the Ministry of Commerce.

Outbound direct investment for 2011-15 is expected to register double-digit annual growth to $560 billion, matching the nation's foreign direct investment, the ministry said earlier this year.

"The high growth trend is irreversible," said Jessie Tang, partner at law firm Jones Day in Beijing.

The firm specializes in mergers and acquisitions.

Chinese companies expanding overseas, apart from seeking trade opportunities, will also create jobs and help fend off protectionist measures, she said.

More than selling cost-competitive products, Feng has a brand vision for the alliance.

"Creating brands is different from just doing business because it requires absolute honesty. Our alliance will supervise the members and ensure quality products," Feng said.

He also feels that overseas subsidiaries of Chinese businesses must create value for local communities. Consequently, Feng encourages the alliance's members to expand through joint ventures with foreign companies, rather than acquisitions.

Feng's vision and sincerity have already won enthusiastic support among community leaders.

Trevor Dorling, of Greenwich Council, said that working with Feng has allowed his team to come into contact with Chinese companies.

"Our ambition is to become a home for successful Chinese businesses, and over time they will create jobs for residents and provide business opportunities for local companies," he said.

The office in Greenwich will be set up at Greenwich Peninsula, a 77-hectare office and residential development currently under development.

Dorling believes that companies will be able to expand into bigger office space at a later stage.

Dorling agrees with Feng that extra help for Chinese businesses is needed as overseas expansion is still a new concept.

The council is allowing the alliance's members to move in rent free for one year, and receive a 50 percent rent reduction for their second year if they commit for another year after the second. The standard rent is 550 pounds ($858) per office desk per month.

"We accept that some companies will come and find this is not the right thing for them, but we expect that a number of them will stay, prosper, grow, and introduce new Chinese businesses to Greenwich," he said.

In Brussels, a group of the alliance's members are now beginning to move into Tour & Taxis, a business complex with shop space in central Brussels.

Another two groups are soon to move into the European Market City, a business hub along the highway between Brussels and Antwerp.

Many of the companies choosing the EMC are manufacturers.

Guido Bernaerts, CEO of Group Bernaerts, which developed the EMC, said that the project connects manufacturers from China and retailers from Europe.

Group Bernaerts also gave the alliance's members one year free space. The standard annual rent is 150 euro ($200) a square meter.

Group Bernaerts has partnered up with 10 professional services firms, including the Industrial and Commercial Bank of China, to provide the businesses with services such as market research, company registration, human resources and accounting services.

Due to the large volume of its foreign exchange reserves, growing corporate demand for expansion abroad and the spreading debt crisis in the Europe, China's ODI has been growing.

China overtook Japan and the United Kingdom in 2010 to become the fifth-largest global investor. China was the largest investor among developing economies in 2010 and last year.

China's ODI rose last year by 1.8 percent year-on-year to $60 billion.

Feng represents a new generation of Chinese entrepreneurs who champion high-tech innovation and brand-value creation.

As a testament to the effort his company invests in protecting innovation, Aigo Digital Technology won a landmark intellectual property rights case against Toshiba in a Chinese court in October.

Other examples of Chinese companies that have come to realize the value of branding include clothes maker Bosideng and air conditioner producer Gree Electric Appliances.

Contact the writer at [email protected]