Alliances and Interfirm Relationships Step 2. The Case Study on Sino-Finnish Joint Venture: Shanghai Fimet Medical Instrument By: Nina KOSTAMO (Finland), Phuong TRAN (Vietnam) & Lu ZHOU (China) CERAM Sophia Antipolis March 2006

Presentation of Equity JV: Shanghai Fimet Medical Instrument Presentation of Equity JV: Shanghai Fimet Medical Instrument 50% Chinese Party: Shanghai Medical Instrument Co., Ltd. 50% Finnish Party: Fimet 25%, Sitra 12.5% Finnfund 12.5% Founded in 1994 & based in Shanghai The investment capital of 3 million USD Objective: Supplying dentists, domestic or abroad, with the first class products and perfect after-sale-service. 95% of output sold in China

Target Managers Conducted interview: Matti Kerppola, Manager, Finnfund, Helsinki Have been involved in the JV since 1995 An hour-long, face-to-face interview with semi-structured questions Contacted manager: Gang Chen, Manager, Department of Marketing, Shanghai Fimet Medical Instrument Co., Ltd Initial telephone conversation – Questions sent by and fax Managers to be contacted: General Manager, Fimet Finland Simo Makkonen, CEO, General Manager, Shanghai Fimet Medical Instrument Co., Ltd

Overview of Finnfund Finnish development finance company Provides long-term risk capital for projects in developing countries and transition economies outside the EU Services: – Financing private projects that involve a Finnish interest and ventures that use Finnish technology – Co-investing and cooperating with Finnish companies on a long-term basis 18 target countries, 71 investments and a portfolio of 91 MEUR (2004)

Key Results from the Interview with Mr. Kerppola, Finnfund (1/2) Starting the cooperation: Fimet prioritized the Chinese market due to its large size, growing potentiality an cheap production opportunities. The operarations of JV started fast: profitable already in Choosing the partner: The Chinese state assigned the partner for Fimet. Joint goal: To be the leading quality dental care equipment manufacturer in China against the main competitors, the American companies. Resources pooled: Finnish partner provides technology and Chinese partner provides the distribution channels, marketing and support for customer relationship building.

Key Results from the Interview with Mr. Kerppola, Finnfund (2/2) Decision making: Board of Directors meets twice year to decide on sales objectives and investments, etc. Majority (4 of 7) are Finns and the Managing Director of JV is always a Finn. Personnel: From the beginning completely Chinese Benefits: Chinese partner has helped with regulations and other administration. Challenges: Short-term (gaining ”fast” money) vs. long term objectives (investments) Lessons learnt: Fast changing market and the management styles. Big differences between provinces. Planned duration: The JV is built for 30 years. Finnfund will support the JV a few more additional years.

Sources Fimet: & Finnfund: Finnfund Fimet’s joint venture in China brings surging sales. (pu0suhjt25o5kmfedb0dfp45)/.%5Caffiche%5C _4.pdf

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