From paper engineering to banking
China has solved some of its manufacturing industry economic problems over the past couple of years, but there is still much to be done in the Chinese economy when it comes to transparency, consistency and stability, according to SEB Shanghai’s general manager Niina Äikäs.
TEXT: Jan Hökerberg
15 MARCH, 2018
As a banker in Shanghai, SEB’s general manager Niina Äikäs follows the Chinese economy daily in her work. She also gets information from the bank’s China Financial Index, which is published twice a year and is based on a business climate survey of SEB’s Nordic and German corporate clients.
Recently, she has noticed some positive trends: “The manufacturing industry in China had a tough time in 2015-2016 because of overcapacity in many sectors. At the same time, China was rapidly transforming to a service-oriented society and we have seen big growth in the consumer market. China’s economy has, however, remained strong and they’ve been able to solve some of the overcapacity issues,” she says.
“The steel, cement and chemicals industries have solved a lot of problems and the Chinese state-owned enterprises are doing much better than a few years back,” she says, adding that it is not only about what China does because China is dependent on global demand.
The commercial banks’ non-performing loans are still a worry, however, she says. “The official figure is at an around 1.75 per cent ratio, but according to our own calculations, and estimates from Bloomberg and the International Monetary Fund (IMF), the figure is much higher.”
Being a banker was not really on Äikäs’ agenda when she grew up in the 1970s in the Finnish town of Nokia, which at that time was not known for its mobile phones and networks but for paper and rubber. The company Nokia was a conglomerate which then manufactured, among other things, tyres, gas masks, rubber boots and paper.
“It was a town where everyone’s parents worked for either the paper mill or the rubber factory. It was a safe and nice place to live as a child,” says Äikäs.
After finishing upper secondary school in Espoo, close to Helsinki, Äikäs entered university and graduated in 1994 from the Helsinki University of Technology with a Master of science in technology.
She did her Master’s thesis at a Stora Enso paper mill in Imatra, close to the Russian border, and after graduation she joined Jaakko Poyry as a consultant and worked on restructuring work for international projects.
The RMB is on the road to becoming a truly global trade and reserve currency.”
A couple of years later she moved on to become a paper industry analyst at the commercial bank Postipankki in Helsinki which is today owned by the Danish Danske Bank.
“At that time, I became more convinced that working as a paper engineer was not my future. Part of the decision was based on the reality that paper mills are normally not located in, or close to, bigger cities, but mostly in quite small towns in the countryside. Banking, on the other hand, offered many job opportunities in capitals such as Helsinki and Stockholm which was more attractive when you were young,” says Äikäs, who besides having Finnish as a mother-tongue also is fluent in Swedish, English and German and is studying Chinese.
So in 1998, she was hired by Citigroup Finland, first as a forest products industry analyst and later director at its corporate and investment banking unit, where she stayed for 10 years. “It was a very interesting ‘school’ for me, working with analysing credit risks in a very global environment,” she says.
However, she wanted to come closer to the clients and travel a bit less so that she could spend more time with her family which consists of husband Juuso, sons Akseli (21 years today), Olavi (18) and daughter Stella (12).
Sometimes you get a feeling that China is carrying out reforms with one foot on the brake pedal and the other foot on the gas pedal.”
She joined SEB Finland in 2008 as a client executive, working mainly with corporate banking for large Finnish international corporations.
When Fredrik Hähnel in 2015 left his job as general manager at SEB Shanghai and moved to Hong Kong to become head of SEB in Greater China, Äikäs was appointed to be his successor in Shanghai.
“I have always been interested in Asia and in China and I had been involved in several transactions there so I had made frequent visits to the region. However, to work abroad is always a balancing act when you have a family and the decision involves many people. But the puzzle pieces did fit well for us at that time. The first year, I was in Shanghai by myself while our eldest son joined the Finnish army and my husband supported our two other children. After one year, they joined me here except for our eldest who was entering higher education in Finland. My husband could continue working with some projects for a Finnish consulting company while our two children here are attending international schools in Shanghai,” says Äikäs.
The year when Niina Äikäs came to Shanghai as general manager for the SEB branch.
She had settled in Shanghai at a time when China’s stock market went through unprecedented volatility throughout 2015 and 2016 after the Shanghai Composite Index soared nearly 140 per cent between June 2014 and June 2015 and then plummeted sharply in 2016.
Äikäs expects that volatility factors will remain in the stock market in short to medium term: “Changes are hard to predict and sudden regulatory changes can create big noise. Regulations can expand to political risks. Recent examples include controlling cash outflows, enforcing environmental policies and new cyber security laws. Despite all this noise and bumps, the RMB is on the road to becoming a truly global trade and reserve currency. The Swedish central bank (Riksbanken) and Swedish pension funds will start buying RMB soon,” she says.
“What China needs is consistency, transparency and stability in its reforms, so that the interpretation of the regulations make it easy for the players. When investors make a decision based on certain guidelines, they want long-term stability. However, sometimes you get a feeling that China is carrying out reforms with one foot on the brake pedal and the other foot on the gas pedal,” Äikäs says.
Facts about SEB Shanghai
SEB’s Shanghai branch has 45 employees, whereof four expatriates. The bank opened in 2005 and offers, since 2009, banking services in RMB. SEB Shanghai offers its clients, mainly from the Nordic countries and Germany, a broad range of financial services such as working capital financing, foreign exchange, cash management and trade finance.
In Asia, SEB also has branches in Hong Kong and Singapore and representative offices in Beijing and Delhi.