Peking University Business School Network Volume -- Changing Direction is the First: Speeches by Famous Entrepreneurs at Peking University (I)

Author: He Zhiyi (Editor)
Publisher:
Publish Date: 2004-09-01
Features: Listen to entrepreneurs, gather entrepreneurial thoughts, summarize entrepreneurial experiences, learn entrepreneurial spirit, study corporate management cases, formulate corporate development strategies. – Professor of Finance and Doctoral Supervisor at Guanghua School of Management, Peking University, Cao Fengqi.
Nokia began establishing production bases in Beijing, Suzhou, Dongguan, and other cities in China in the 1990s. As major investors, exporters, employers, and taxpayers in these regions, they became vehicles for continuously deepening Nokia's localization strategy. When the company first started, China's entire industry and sector were not yet fully developed, and localization was still in its early stages, requiring deeper integration. Centered around the Beijing Shouxin Nokia, the company established a world-class communication industry base—the Star Network Industrial Park—with the goal of achieving zero inventory and economies of scale. Through partnerships with joint venture partners, Nokia drove more than 20 suppliers to build over 20 factories within a 50-kilometer radius, achieving annual sales of 50 billion RMB. Factories related to the supply chain were all concentrated in the same industrial park, a bold and unprecedented innovative model in the industry. For a long time, joint ventures were primarily focused on producing single products. Foreign companies entered the commodity market by establishing joint ventures with Chinese partners. However, markets are cyclical, and when competition arises due to product homogenization, profits gradually decline. So, how could the development of joint ventures be ensured without being limited to a single product? To address this, Nokia and its partners jointly explored the path of development, considering what to do when the product's lifecycle ended. In 2003, Nokia made a significant move in China by consolidating four of its joint ventures into a single foreign-invested joint-stock company, comprehensively improving the operational efficiency and overall competitiveness of Nokia in both China and the global market. This initiative was a bold attempt and also received strong government support. Through this model, Nokia saved significant internal costs and further simplified its interface with customers. For example, the Beijing mobile phone factory transformed from a standalone production facility into a central production hub. This production model effectively reduced overall costs. The products were sold domestically by Nokia, exported overseas by the Nokia Group, and also distributed through other sales channels. This is precisely how partnerships create a win-win situation. Nokia further develops the market through overall control, and our joint venture partners also have the ability to expand their sales channels. This is our new structure, and I hope it will soon reflect the model of our new structure.