Center Links Firms with Foreign Partners

The recent opening of China (Shanghai) Pilot Free Trade Zone has set Wang Zhendong thinking about ways to go international. Wang, head of the Shanghai Coffee Association, which oversees about 100 small coffee dealers in the city, would like to set up an international coffee trading center in the zone.

"China has no influence internationally over the pricing of coffee, which puts it at a disadvantage," says Wang, referring to recent concern over Starbucks' price differentiation strategy for China.

As a lecturer on tourism management at a Shanghai college, Wang realized a while ago that having a coffee was seen as a hip and affluent social habit by the growing Chinese middle class and that many aspired to create a good business by opening cafes to cater for this evolving demand. So he opened an evening course on coffee house management, which won widespread praise.

But he discovered the main area where Chinese coffee entrepreneurs were found lacking was in bean-roasting skills and facilities. That more than anything else put the foreign coffee shop chains at an advantage compared with the local brands.

Wang sensed an opportunity to integrate the largely fragmented industry chain that employs at least 100,000 in Shanghai.

"We want to go abroad and bring in the ingrained cafe culture with the best possible roasting techniques," he says.

But he could not have taken the first step without the aid of an incubator program run under the auspices of the SSEC, which he and several other local coffee dealers were put on to by Da Jie, the center's head of international cooperation.

Wang was well aware that selling coffee to Westerners was as difficult as an American running a teashop business, but he believed that, with the right formula, he could penetrate the take-away market in convenience stores.

Last year, he established the Shanghai Coffee Association, aiming to bring together like-minded small businesses and reach out to acquire world-class technology, such as that for bean roasting.

The association quickly became a hot topic among foreign investors. Leveraging the resources of the SME center, Wang made contacts with coffee-industry unions in Colombia, Brazil and India and is now in the process of striking import deals.

He has invited guest professors from Japan and the Netherlands to his coffee shop management classes and has begun talks with an Italian vendor, which he hopes may lead to a joint venture bean-roasting business.

"It's hard to approach people on my own. We need a concerted effort," he says in thanks to the SSEC.

Matchmaking software

Tang Wenming and his company, License Software Consulting Co Ltd, can take some credit for various small-business successes by helping the Shanghai SME center with precise matchmaking.

Tang has seen his business grow through the collaboration with SSEC, winning many Fortune 500 companies as his clients in the process.

His company designs custom-made compliance automation software that helps small Chinese companies gain a foothold in Europe and vice-versa.

Several years ago, however, his first foreign clients were small companies that were eying China but which couldn't afford to establish entities on the Chinese mainland.

So Tang decided to serve them in their hometowns. In 2006, he chose the Netherlands as his overseas base because of its good public security and transparent business environment. Everything went smoothly, except for one thing - he was alone.

"Our company was too tiny to build a reputation and a network there," Tang recalls. "Nobody bothered to meet us. We couldn't survive without resources."

He did not make another attempt until 2008, when he joined an incubator program set up by the Yangpu Technology Innovation Center, the nation's top business incubator for early- to middle-phase startups, and now overseen by the SSEC.

That's when everything started to click into place and business began to connect. Tang outperformed competitors and won the top place on a Sino-European entrepreneurship plan introduced by the center.

"Small is beautiful. But we need to get together to magnify our strengths," he says.