Czech “camels” to depart from Lanzhou in August

From January 19th to January 21st 2011, Czech Ambassador to China H.E. Libor Sečka, accompanied by deputy head of the embassy´s commercial section Jan Hebnar, paid a visit to the capital of Gansu Province, Lanzhou. In Lanzhou, they witnessed the signing ceremony of a contract establishing a joint venture between the Czech company STAVUS and its Chinese partner Gansu Guotou.

In the eyes of its citizens, Lanzhou is the cradle of Chinese civilisation. There is definitely a piece of truth in this, though one must not forget to mention that other cities also make the same claim to fame. Far in the ancient times, Lanzhou represented an important hub for Chinese traders on their way to the Middle East (and from there to Europe) with shipments of spices, arts and crafts and, most importantly, silk. No wonder that it remains well-known as a key spot of the Silk Road even in our times. The cultural, political and also economic importance of the whole Gansu Province was also determined by its geographical position between the “civilized” China in the East, and remote areas of Xinjiang and Tibet in the West. But history has washed away a little bit of the glory of the old days of this province whose mountains in the North are covered all year long with snow and ice while orange orchards are abundant in the South. Today, Gansu is one of the less developed areas in China (with yearly GDP of 12,000 RMB per capita, about 1,800 USD) and one its capital Lanzhou can hardly be described as a city of fast-paced economic growth, unlike some of the cities of China’s South-East or Sichuan. But that does not mean that there are no economic opportunities and challenges – Lanzhou is still a huge city, at least in European eyes (with its 3 mil. inhabitants) and the entire Gansu Province is easily comparable to an average European country (with 26 mil. inhabitants) And is it this economical potential which is behind the current project of the Czech company STAVUS – establishing a joint venture with the renowned Chinese company Gansu Guotou to produce tractor engines. STAVUS is an experienced player in the Chinese market. It has been offering and successfully selling Czech-made mining machinery here for many years. But setting up production “on the spot” in China is something quite different – even though a lot of experts, including the commercial section of the Embassy, say that at least a partial relocation of production is often necessary to succeed in China, especially if price of the final product is an important criterion. And this is just the case with engines for small three-wheeled tractors – an item that the joint venture is going to produce. On the local market, the whole tractor is being sold for unbelievably low 8000 RMB. Ambassador Libor Sečka and Mr. Jan Hebnar therefore gladly accepted the invitation of the Gansu provincial government and participated, along with STAVUS liaisons (including the vice chairman of the board Mr. Šmejkal ) and Mr. Liu Yangfu, vice governor of the Gansu Province, in the signing ceremony for the joint venture contract. Afterwards, they were invited to visit the factory producing small tractors whose name (in almost untranslatable Chinese) combines the emblem of Lanzhou and the Chinese character for “camel”. The first Czech “camels” should leave the factory already in August 2011, although this goal may sound quite ambitious today. Nevertheless, the project is heavily supported by the Gansu government, and that is always a good sign. The support will be needed especially because there is still a lot to be done – the existing premises evoke the atmosphere of the films of early post-war Czechoslovakia and renovation, during which the factory would be equipped with modern (hopefully Czech) machinery, is much needed. But Lanzhou is not only a city of heavy machinery, petrochemical and chemical industry (the delegation visited, among others, a modern LANPEC factory producing crude-oil drilling equipment). In modern Lanzhou, wine production (as observed by the Czech guests in the hi-tech factory Mogao) and the food processing industry in general also have their place. Lanzhou noodles, whose preparation by hand-pulling is a culinary ritual worth experiencing, are famous all around China. To sum up, the project of STAVUS has followed the route which is in most cases fundamental for success on the Chinese market. Supply of high-tech technologies, production plans and know-how from the Czech side will be supplemented from the Chinese side by relatively cheap materials, labour and an established distribution network, as well as the “camel” brand. Although it’s far too soon to see the final result, one can say that STAVUS started on the right path.