Whitepaper 2018

Producing in the Greater Bay Area Why this is the perfect time to produce in China Your worldwide production partner With our production sites spread across three continents, we are in a great position to provide local for local production. This advantage leads to increased efficiency, more flexibility and low transport costs. As a result of our global quality standards, our customers can benefit from the same excellent service levels and quality no matter where they are.

www.rompagroup.com T: +31 13 205 57 97

2 Why this is the perfect time to produce in China Connectivity Whitepaper 2018

If there is one place on Earth where the landscape has changed dramatically over the past three decades, it would be the Greater Bay Area in China. This area consists of the cities Zhaoqing, Foshan, Zhongshan, Zhuhai, Guangzhou, Huizhou, 1984 Dongguan, Shenzhen and Jiangmen, where Rompa Group is located. Macau and Hong Kong, the special administrative regions of the republic of China, are also part of this area. Zhaoqing

Guangzhou Huizhou

Foshan Dongguan

Shenzhen Zhongshan Jiangmen Zhuhai

acau on on

Connectivity Whitepaper 3 Hong Kong - 1964

4 Why this is the perfect time to produce in China Connectivity Whitepaper Back in 1984 (see image p.3), this region the story of Machiel, a Dutch Rompa employee mainly consisted of farmland, untouched who left everything behind to dive head-first nature, fishing ponds, rice paddies, and into his new life in China. What challenges and forests. Today, it is dominated by factories, cultural differences did he face? What does he office buildings, and high-tech campuses. believe we can learn from the Chinese? The World Bank has called the region around the major cities of Shenzhen, Dongguan, One thing is for certain: the Chinese culture Zhongshan, Foshan, Guangzhou, and Jiangmen can be difficult to comprehend. If you are the largest metropolis in the world. The planning to do business in China, our practical number of inhabitants and the gross national tips can help you out. Finally, we want to show product grow faster here than anywhere else you what Rompa can do for you in China. We in the world. In 2016, the Chinese government opened our first site in China in 2000, have developed its thirteenth five-year plan, which been active years before and we have been is intended to highlight the region’s role and bridging the gap between East and West inspiration to become the global economic ever since. We were, are, and always will be supply chain. convinced that this is the perfect location for the development, production, and assembly of In the 1990s, Western production companies high-quality plastic products with or without mainly moved to the Greater Bay Area to electronic components. benefit from the cheap labour that was available there. These days, however, wage costs are no longer the only reason companies choose to have their products manufactured in China. The rapid economic growth makes this part of China even more interesting. In this whitepaper, we will explain why. It also tells

Hong Kong - 2018

Connectivity Whitepaper 5 1 Nine reasons why this is the perfect time to produce in China

As a rising superpower, China offers an infinite amount of opportunities to Western organisations, particularly in the region around the Greater Bay Area. Here are nine reasons why this is the perfect time to work together with a production company established in China:

The Chinese excel at smart Throughout the rest of China, production 1 engineering sites are being automated and robotised on a large scale and the lean method is rapidly Anyone thinking of having their products growing in popularity. The Greater Bay Area produced in the Greater Bay Area should not is known for its high-tech manufacturing and do so just because labour is cheaper there. telecommunication. Moreover, there is a As the economy continues to grow and more mature innovation and start-up culture which and more people get an education. Why, will accelerate the future development of the then, would you want to produce in China? area. All this is necessary, too; the Chinese First, think of the large amount of technical workforce is ageing as a result of e.g. the expertise. China has set up its educational country’s one-child policy. system in such a way that the future workforce is in line with the need for expertise from the market. That’s why the Chinese excel at smart engineering. This, in combination with the advanced tooling and state-of-the-art electronics that is available in large numbers, Tokyo New York Greater bay San Francisco makes the Greater Bay Area the perfect place GDP (in billion USD) for production. 18 14 13,6 7,6

Moreover, it is certainly possible to operate GDP per capita (x 10.000 USD) more efficiently here. For example, because of a few new projects, Rompa’s production site 4,1 6,9 2 9,9 in Jiangmen managed to quickly upscale to Surface (x 10.000 km) more than 650 employees. When the projects were running, we investigated possibilities to 5,6 3,7 1,75 1,74 work with fewer people by automating certain Population (in mln) processes, and we adopted the lean method. Thanks to that, we were able to scale to just 43,5 23,4 66,7 0,7 300 employees. Source: Greater Bay Area Forum, Tencent

6 Why this is the perfect time to produce in China Connectivity Whitepaper According to the International Federation of Robotics (IFR), the number of new robots in China will increase by an average of 20-25% per year in the years to come. That is faster than anywhere else in the world. With this development, China – which traditionally has a labour-intensive industry – is rapidly gaining on other major robotising nations such as Germany, the United States, Japan, and South Korea. In 2020, China is expected to purchase 210,000 industrial robots. That means four out of every ten new robots produced will be sold to a Chinese buyer.

Extensive supply chain makes it 2 easy to scale up quickly Excellent customer service is 3 “This is perhaps the biggest advantage of the standard our location in China,” says Jesse Plasman, In the Chinese business world, nothing is more director Far East at Rompa. “Whenever you important than having a good relationship need machinery, resources, components, jigs, with your customers. That is why the Chinese excel at customer service. Jesse Plasman has first-hand experience with that: “The people in our customer service department are amazing. They truly go to great lengths and make full use of their patience, customer-friendly attitude, expertise, and listening skills when dealing with customers. It is not just about finding quick short-term solutions; our Chinese employees strive to gradually develop long- term partnerships with customers. That level more people, or knowledge about the latest of devotion to customers also typifies Rompa, production techniques, you can find all that which explains why we fit in so well here.” and more practically around the corner. That makes it easy to scale up quickly and flexibly accommodate our customers’ wishes. We usually produce series of 50,000 to 1 million assembled products. In that range, you can be truly competitive here because of the high availability of people, knowledge, and resources. That is hardly possible in North America or western Europe these days.”

“We usually produce series of 50.000 - 1 million assembled products,,

Connectivity Whitepaper 7 “The Chinese are fully devoted Ever-faster connections to their tasks and they see 4 between China and Europe opportunities everywhere,” If you have your products manufactured in China, you want them to reach their destination, e.g. Europe, as soon as possible. Good news: the Chinese government has introduced a large-scale investment programme to improve its infrastructure and to increase connectivity and cooperation Typically Chinese: an 5 between Eurasian countries. The programme entrepreneurial and connects Chinese industrial cities to sixty optimistic work ethos countries across Europe, Asia, Africa, and Oceania. A railway connection between China In January of 2018, 1,500 Chinese workers built and several European cities, including Tilburg a railroad for a high-speed train. How long it and Rotterdam in the Netherlands, is part of took them? A single night! This illustrates the the initiative. This train can make the trip to typical Chinese work ethos, which is all about Europe in fifteen to eighteen days, making it decisiveness, optimism, and entrepreneurship. more than twice as fast as any container ship. “The Chinese are fully devoted to their tasks Compared to airfreight, the train is cheaper and they see opportunities everywhere,” and offers a reduced environmental impact. Machiel van Reenen says. “The people here are very flexible about where they work, whom The local infrastructure has also improved a they work for, and what kind of work they lot over the past few years. Nowadays, you do. Carrying out repetitive tasks is nothing can travel by train from Shenzhen to any place unusual, especially amongst older generations. in the Greater Bay Area in just one hour. The What matters most to them is that they can development of airports, harbours, rail roads support their families. Young people often and the enormous bridge between Hong look for a bit more of a challenge in their work. Kong, Zhuhai and Macau, which also includes They are more likely to pursue a career as a tunnel, makes for easy connections in the e.g. an electronic engineer, a quality engineer, area. The bridge – which cost more than $ 10 or a process engineer.” The Chinese people billion – reduced the travel time between Hong keep searching for the right solutions. They Kong and Macau from 4,5 hours to 40 minutes are innovative and empowered to resolve the by car. issues with their team.

Billion Rank GDP (2017) USD 1 United States 19,362 2 China 11,937 3 Japan 4,884 4 Germany 3,651 5 France 2,574 6 United Kingdom 2,565 7 India 2,439 8 Brazil 2,080 9 Italy 1,921 10 Greater Bay Area 1,830 11 Canada 1,640 12 Korea 1,529 13 Russia 1,469 14 Australia 1,390 15 Spain 1,307

8 Why this is the perfect time to produce in China Connectivity Whitepaper “The Chinese are fully devoted to their tasks and they see 6 Large skilled workforce opportunities everywhere,” Both highly skilled employees and manual workers are relatively easy to find in China. The country has the largest workforce in the world with more than 800 million employees. On top of that, the Chinese are highly mobile when it comes to their career. For many people, it is no problem at all to move across the country for work, even if that means they only get to see their family a few times per year.

7 A thriving local sales market

The Greater Bay Area is the perfect strategic location for local-for-local production, as it is situated close to Japan, India, and South Korea. However, the biggest opportunities can be found in China itself. Although there is On top of that, the number of highly skilled still a major welfare gap between the wealthy employees is growing. In 2017, eight million and the poor, the average income of the students acquired a higher-education degree. country’s 1.3 billion people is on the rise. As a That number is ten times higher than it was in result, the prosperous middle class continues 1997 and twice as high as that of the United to grow. Experts and economists agree that States. Because of the Chinese government’s China is well on its way to becoming an efforts to stimulate technological innovation, engineering is one of the most popular fields of study. Although the number of Chinese people who speak English is still relatively low – estimates range from 10 million to 300 million – the language is becoming increasingly common, especially among young, highly educated people. For businesses, this means there are great opportunities in developing their business, as the right people with the right skills are available in large numbers.

economic superpower. Partly because of the expenses of Chinese consumers, the country’s economy grew faster than expected in 2017, by 6.9%. This creates new opportunities for

Connectivity Whitepaper 9 China maintains a laser- sharp focus on quality, safety, certifications, and labour organisations interested in local-for-local production in China. The thirteenth five- year plan made it clear that China will keep investing in the Greater Bay Area in the future to let China play a remarkable role in China’s economic intregration with the world. Especially for luxury goods such as cars, designer clothing, and consumer electronics, the sales market is rapidly growing. An example: in 2015, 620 million Chinese people had a mobile phone subscription with mobile internet. By 2017, that number had grown to 695 million. On top of that, products from western brands are enormously popular in China.

The new Made in China: 8 quality first many highly educated Chinese people are When you see the words “Made in China” familiar with our Western quality systems on a label, you might not immediately and standards. Machiel van Reenen, quality think of quality products. Nevertheless, engineer at Rompa, agrees: “In my experience, China is shifting its focus to the production China maintains a laser-sharp focus on of first-class products and adapting the quality, safety, certifications, and labour worldwide quality standards. Just look at law. For example, we are audited several the smartphone manufacturer Huawei, times a year by different organizations, like which is slowly conquering the market with customers, external audit companies and its combination of quality and affordability. the government.” Over the past decade, Floor Nobels, headhunter and owner of China’s legislation pertaining to employment Worklife Recruitment China, says that conditions has been extensively revised.

10 Why this is the perfect time to produce in China Connectivity Whitepaper “Especially at Rompa Group, where we products. As a result, China now has a leading empower our employees to come up with position in fintech, healthtech, artificial ideas, which increases our quality level. Our intelligence, and the Internet of Things. quality department is always looking for In short, if there is any region where you possibilities to improve, such as a quality can make your products better, smarter, or training we took in Hong Kong recently”, more complete with the help of technological Machiel says.

Easy access to the most 9 advanced high-tech knowledge and technology Forget about San Fransisco’s Silicon Valley; The Greater Bay Area and especially Shenzhen is the innovative breeding ground where today’s brightest engineers come together to perform their miracles. In record time, this former fishing village grew into a high-tech hub with more than twelve million inhabitants and four universities in the worldwide top 100. innovations, it is in and around Shenzhen. Shenzhen started out as a copy factory, where The most advanced knowledge of high-tech smartphones and other consumer electronics software, hardware, and electronics is readily were copied by cheap labourers. However, as available here. they copied the work of others, the Chinese gained more and more expertise themselves. So much, in fact, that they have abandoned their former ways and are now fully focused on the development and improvement of

The country’s smartphone market is not dominated by giants such as Apple or Samsung, but by domestic brands like Oppo, Vivo, Xiaomi, and, of course, market leader Huawei. Tencent also has its roots in Shenzhen. Amongst other things, this innovative tech company developed WeChat, China’s answer to WhatsApp and Facebook. The organisation quickly become one of the world’s ten most valuable brands.

Connectivity Whitepaper 11 2 The story of Machiel, a Dutchman in China

It is 2 August 2013. Having just graduated, Machiel van Reenen is packing his bags. His only plan: to do “something” in China. He has no idea of the culture shock he is in for. Now, five years and many valuable life lessons later, Machiel looks back on his amazing adventure.

how the production processes are set up.” According to the International Federation of Robotics (IFR), the number of new robots in China will increase by an average of 20-25% per year in the years to come. That is faster than anywhere else in the world. With this development, China – which traditionally has a labour-intensive industry – is rapidly gaining

The best decision ever “I left behind my student life in the Netherlands to move to a world that I did not understand at all: China. I have always been fascinated by the country. Looking back, this was the best decision of my life. I started working with the frontline operators and lived with them in a company residence. I got to on other major robotising nations such as know the Chinese culture and the organisation Germany, the United States, Japan, and South in a unique and intensive way. Because I Korea. In 2020, China is expected to purchase know exactly what working on the assembly 210,000 industrial robots. That means four out line entails, I have even more respect for the of every ten new robots produced will be sold people who do this job day in and day out. The to a Chinese buyer. factory depends on them. I had a lot of fun, too. I worked with many different people and Language barrier we could all talk to each other as we worked. That is a great way to quickly get to know “At first, anyone who spoke more than three new people. These days, I work as a quality words of English was my new best friend. engineer and I can reap the rewards of my However, the assembly line is mostly staffed experience on the work floor. I know exactly by manual workers who only speak Chinese. If I wanted to communicate with them, I would

12 Why this is the perfect time to produce in China Connectivity Whitepaper “Nowadays, this is the center of the world, the place were technical miracles happen”

have to learn their language. I benefit from of the government is noticeable, of course. that to this day. Learning the language has For example, it is not a good idea to discuss given me a lot of freedom and it has made your deviant political views online. Google, me more independent. I have my own house, YouTube, and Facebook are not available here. a wonderful job in quality control, and a fun In general, that is not really a problem. The social life. Five years ago, I could not even get a Chinese are resourceful and will just build cab here.” their own communication systems instead. With my story, I hope to inspire other young Cultural differences professionals to go to China. Nowadays, this is the center of the world, the place where “Besides the enormous language barrier, there technical miracles happen. If you are open to are also cultural differences. The people here are very loyal to their families. My Chinese colleagues try to give as much of their wages to their parents as they can. They may only see their parents once a year, because they moved so far away for work. Another thing I had a hard time understanding is the living space here, which is much smaller than what we are used to in Europe. Chinese people are used to being close together and touching each other all the time. That is reflected in the way the cities are designed. Everyone lives in high-rise it, you can easily gain respect, make a career, flats, where as many people as possible are integrate in the culture and be a major value to packed onto as few square metres as possible. the company you work for and the people you I am from a small village in the Netherlands work with. I am quite proud of the life I have with lots of open space, so that took some built for myself and I would like to specialise getting used to.” further in the world of project management. I have that opportunity at Rompa Shunxing. Future However, I am also eager to discover the rest “I am still having a fantastic time in China. Not of the world!” everyone gets that. Many people in the west have this outdated view of China as a cheap and restrictive production country. China is a major player on the global stage and a leader in the field of technology. The influence

Connectivity Whitepaper 13 3 Tips to help you be successful in China

Buying a one-way ticket to China and going with the flow was the best decision Machiel van Reenen could have made. However, you might prefer to be better prepared for your first introduction to this country and its culture. Here are some of the things you have to take into account when you work or do business in China.

Respect Language One of the most important values in Chinese If you want to interact with the local culture is respect, which is expressed in a population, you will need at least a basic variety of ways. For example, it is an unwritten understanding of the Chinese language. The rule that you accept someone’s business card original inhabitants of the Greater Bay Area with both hands to show your respect for mainly speak Cantonese, although most your business partner. The Chinese are the Chinese who work here (also) speak Mandarin, opposite of “to the point.” Expressing criticism i.e. Standard Chinese. If you plan to stay in directly is therefore not appreciated. Instead, China for a while, it would be a good idea to try to convey your message in a subtle and tactical manner to avoid damaging the other person’s reputation. Losing face is one of the worst things that can happen to a Chinese person. That is reflected in their work ethic: they will move heaven and earth to get the job done – all to avoid the public humiliation of not having finished one’s tasks.

learn to speak and understand Mandarin. Note that most western organisations in the region use English as their primary language. Rompa, for example, only communicates with its customers in English.

14 Why this is the perfect time to produce in China Connectivity Whitepaper “they will move heaven and earth to get the job done,,

Alternative online platforms WhatsApp, Facebook, Google, and YouTube are all unavailable in China. Luckily, there Guanxi are Chinese alternatives for these services. WeChat, for example, is a great way to meet The word “guanxi” means “relationship” or other people, chat with them, order a taxi, “connection.” Good connections are the key pay for products, share pictures, videos, and to successfully conducting business in China. audio clips, and translate texts. Youku Tudou Once you have developed a good relationship is China’s answer to YouTube. If you need with a business partner, there is virtually nothing they won’t do for you. However, it can take a while to develop this kind of bond. The Chinese do not really distinguish between professional and personal relationships, so it is quite common to have informal interactions with business partners. Do not be surprised if collaborating or conducting business together is not mentioned at all during one of these informal dinners.

Caring for your employees Most western organisations have no trouble finding qualified employees in China. The trick is to retain them, because the Chinese are very flexible when it comes to their careers. If they can find better work or earn a bit more money elsewhere, they will leave you at the drop of a a search engine, there is Baidu. Remember hat. If you want to develop a stable business, it that politically charged messages posted on is important to invest in your employees – not Chinese social media platforms are censored just by offering them a good salary, but also and that Tencent, the company behind by e.g. providing housing and social activities. WeChat, may share your personal information This fosters a feeling of commitment in your with the police and the government. people.

Connectivity Whitepaper 15 4 Rompa Shunxing: your western production partner in China

16 Why this is the perfect time to produce in China Connectivity Whitepaper Are you looking for a reliable production partner in China? A partner with western points of contact and management and a thorough understanding of the local market? Rompa Shunxing is eager to collaborate with you. Rompa has been building bridges between east and west for years.

We strive to combine the best of both worlds with the help of people like Jesse Plasman and Machiel van Reenen: Dutch experts who dove head-first into the Chinese business culture and mastered its many intricacies. At our production site in Jiangmen, we develop and produce fully-finished plastic products for leading organisations in e.g. the automotive, consumer electronics, industrial sector and plastic packaging.

Connectivity Whitepaper 17 “The Chinese are fully devoted More than twenty years of experience to their tasks and they see in China opportunities everywhere,” Rompa is a Dutch organisation with locations all over the world. We have been active in China since the late 1990s. That means we have seen the development of the Greater Bay Area from close by. In fact, we were – and are – part of it ourselves. Just like the region Rompa has grown. At first, our core business consisted of injection moulding, thermoforming and assembly. However, our technical area of expertise has grown exponentially over the years, as has the complexity of our products. Today, we are a completely vertical, integrated company. Our Chinese production site is fully equipped for the production and assembly of electronics, e.g. with an SMT line and an ESD assembly area. Furthermore, our site in Jiangmen has acquired all relevant certifications pertaining to quality, the environment, and production in the automotive and medical sectors. We can test your products with our advanced test equipment. For example, we conduct sound tests in our noise reduction room and we specialise in climate and salinity tests.

Thinking along about the design from a production perspective We can assist you with the entire process from initial idea to delivery of your product. We prefer to start sharing our knowledge with customers during a product’s design phase. This allows us to shorten the time to market and save costs. Our engineers think along with you from a production perspective, for example about improving your product’s manufacturability and cost efficiency, developing electronic components and how to make your product connected.

Undivided attention for our customers Rompa is a medium-sized organisation with healthy growth ambitions. Most of our customers have collaborated with us for years. Why is that? We strive to develop remarkable, high-quality products to which we can add

18 Why this is the perfect time to produce in China Connectivity Whitepaper value with our in-depth knowledge and expertise. We carefully select the projects we take on. As our customer, you can be sure that your product is in good hands and that we will give you our undivided attention. We adhere to the same western quality standards at all of our production sites, we communicate with external parties in multiple languages, including English, and we offer the highest possible quality of service. Of course, we do make use of the newest communication technologies and, if needed, we show up at your doorstep too.

Ready for the future Rompa Shunxing is ambitious and innovative. We are constantly improving and modernising our production techniques and processes. Robotisation and the lean method are standard practices here. We also actively explore faster transport connections and Would you like to collaborate with Rompa Shunxing? The Greater Bay Area of China is the place to be. You can benefit from the developments by working with Rompa Shunxing – part of Rompa Group.

Contact our sales office

T +31 13 205 57 97 E [email protected]

We would be happy to tell you more about the options we offer in China.

customer-specific supply chain solutions to minimise delivery times. Our production site itself is ready for the future and equipped with a full range of state-of-the-art machinery. Sources We have already set up a space for the implementation of new SMT lines. In short, You can find all sources on: we continue to look towards the future and constantly strive to improve ourselves. https://www.rompagroup.com/about-us/ downloads/producing-in-the-greater-bay- area/sources.aspx

Connectivity Whitepaper 19 Your worldwide production partner With our production sites spread across three continents, we are in a great position to provide local for local production. This advantage leads to increased efficiency, more flexibility and low transport costs. As a result of our global quality standards, our customers can benefit from the same excellent service levels and quality no matter where they are.

www.rompagroup.com T +31 13 205 57 97