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The Belt and Road Initiative – what’s in it for Swedish companies?

China’s Belt and Road Initiative (BRI) will impact most Swedish companies operating in BRI countries in several ways, directly and indirectly, writes Fredrik Uddenfeldt of Business Sweden.

TEXT: Fredrik Uddenfeldt, Business Sweden
5 JUNE, 2019

Six years have passed since China launched the Belt and Road Initiative (BRI). Its impact so far is most evident in the areas of transportation and energy, with hundreds of ongoing projects or plans to build railways, highways, seaports and energy infrastructure across a wide range of countries.

Even though Sweden is not a Belt and Road country, the initiative will impact most Swedish companies operating in BRI countries in several ways, directly and indirectly.

The BRI’s total project value likely exceeds US$500 billion and around 100 countries are now part of the initiative. The level of involvement varies significantly between countries. Some countries have no BRI projects while others are deeply involved, such as Pakistan with the US$62 billion China-Pakistan Economic Corridor. The BRI is massive in scale and ambition but is often perceived as vague in its purpose and scope.

It lacks an official list of projects or even a definitive list of BRI countries and the initiative continues to grow and change shape. The BRI’s geopolitical ramifications and partner countries’ debt levels are often discussed in the media as “debt diplomacy”, but its implications and opportunities for individual companies are rarely discussed.

Therefore, Business Sweden has published a report that explores the BRI’s impact on Swedish companies operating in this vast region. The report identified the impact areas below for Swedish companies.

Business Sweden has published a report that explores BRI impact on Swedish companies.

Business opportunities: The vast majority of large-scale BRI infrastructure projects have been carried out by Chinese contractors, most of them state-owned. These companies also dominate global rankings with hundreds of thousands of employees and impressive international project portfolios. Swedish companies’ business opportunities will mainly arise from partnerships with these companies, providing equipment and services to the main contractors of BRI projects – especially within transportation and energy.

But Swedish companies’ abilities to tap into these opportunities will depend on several factors – where coordination, communication, service and high-level commitment will be central to achieve success. The vast scale of China’s global contractors presents unique challenges even to the biggest Swedish companies. Our interviews with Swedish companies’ subsidiaries in China and the BRI region reveal that most companies, if not all, face internal issues that prevent them from making the most of BRI-related business opportunities. These challenges range from business development – some contractors are present in over 100 countries and have tens of subsidiaries – to service delivery. Our interviews with Chinese contractors show that most of them already work with Swedish companies to a certain extent. Even though they are encouraged to buy more Chinese, they often prefer premium equipment for complex projects.

The African infrastructure market is a case in point: In just a few years, Chinese contractors have captured significant market share from European competitors. Swedish companies that only sell to European contractors risk losing market share while Swedish companies that have a strong footprint in China are better positioned to protect their market share there. Some Swedish companies already sell as much to Africa through a China subsidiary as they do through their African subsidiaries and distributors; at least two Swedish companies have even chosen to post Chinese staff to the Middle East and Africa to interact with Chinese clients.

Chinese contractors dominate global rankings with hundreds of thousands of employees and impressive international project portfolios.

Logistics: Swedish companies operating in BRI countries are already experiencing some logistical benefits. Railways connecting China and Europe are already in operation: shipments between China and the European mainland now take around 14 days. Railways have become a feasible and more sustainable option for time-sensitive and high-value shipments in both directions. Railways built in Southeast Asia – especially Laos – will change the logistical landscape, as well as in some African countries. Furthermore, a growing network of highways built by China may spur the demand for premium-segment trucks and buses in many BRI countries. This is especially true for high altitude roads where engine quality is a crucial factor.

Indirect impact: Potentially, the most important takeaway is the BRI’s long-term strategic implications for Swedish companies in the wake of China’s growing international footprint. China’s engagement in BRI countries is usually not limited to infrastructure development. China has a growing number of bilateral free-trade agreements with BRI countries, something that will have a direct impact on Swedish companies operating in these countries if they are suddenly subject to higher import tariffs than Chinese competitors. China also has ambitions to internationalise its domestic standards, amid signs that developing countries are increasingly willing to adopt Chinese standards as their domestic standards, such as in the railway sector. Furthermore, the Digital Silk Road – the internet arm of the BRI – has so far played a relatively minor role but is likely to become more influential. The BRI will also probably intensify competition as it paves the way for Chinese equipment providers to explore foreign markets.

The rapid maturation and internationalisation of Chinese industry will lead to both opportunities and challenges for Swedish companies in both China’s domestic market and in global markets. The BRI is accelerating this process, adding further urgency to Swedish companies’ need for a structured and strategic approach to China and Chinese companies. Many Swedish companies are used to serving Chinese clients in China, but not outside China, which is something that will have to change with a more global China.

Fredrik Uddenfeldt works as Head of Government Affairs, Asia-Pacific Region, at Business Sweden, which has 15 offices in the Asia-Pacific region including two in mainland China. Uddenfeldt has previously served as a career diplomat with the Swedish Ministry of Foreign Affairs and has covered the infrastructure industry at the European Chamber of Commerce in China. He has lived in China for six years and has degrees in economics and Chinese. He is currently based in Stockholm, Sweden.

The full report is available at For any questions related to the report, please contact Fredrik Uddenfeldt at [email protected] or David Hallgren at [email protected].