Kone opens up sales and service outlet in Tibet

Political questions not considered when heading into growth markets

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On Friday of last week, the lift and escalator concern Kone became the first Finnish company to open an outlet in Tibet, or more accurately the Tibet Autonomous Region under Chinese control.
      Kone is one of the few Western companies to have opened up shop in the politically sensitive location of Lhasa, regarded as the holiest centre of Tibetan Buddhism.
      "We are an elevator company and we go where there are customers and business opportunities", explained Kone China's Managing Director William B. Johnson.
      The Lhasa unit will handle sales and service operations in the region.
     
For years Tibet has been the poorest and most backward area under Chinese administration, but now the effects of the Chinese economic boom are being felt even in this remote mountain region. Lhasa is a city of just 200,000, and much of the housing stock is low-rise buildings, but economic growth has seen a good many new and increasingly tall structures going up.
      According to Kone, the number of lifts in the country as a whole nearly doubled from 350 last year. Even so, Tibet remains a tiny market: in China there were orders in 2006 for a total of 146,000 new elevators.
     
The Chinese Army occupied Tibet in 1951, and eight years later the Dalai Lama and his government fled into exile in India.
      Human rights campaigners say the Chinese have treated the Tibetans harshly in the years since then. Reports from the region speak of restrictions on religious worship, political prisoners, forced labour camps, and torture.
      Kone's William B. Johnson said that these issues were not considered in the decision to open an office in Lhasa. The company has no political motives, he argued, at the opening of the new premises.
     
There have been suggestions from the government-in-exile that the economic boom that has now spread even to Tibet has benefited primarily Chinese citizens who have settled in the region, and not local Tibetans.
      A spokesman for the Dalai Lama's government in India, Thubten Samphel, commented that a number of large projects in Tibet, for example the construction of a new airport for Lhasa, will further the flow of Chinese nationals and increase the Chinese influence in the holy city.
      The opening up of a rail link last year has also accelerated the migration, which is fuelled by a sense that Tibet is the new Chinese "Wild West", an area of golden opportunity for entrepreneurs.
     
Kone is supplying elevators for the new airport, for a new industrial area, and for two luxury residential properties, and the company says it is benefiting the development of Tibet by bringing new technology and jobs to the region.
      To a great extent, the economic boom that has spread to Tibet is an urban phenomenon, limited to Lhasa and environs. Some 85% of Tibet's population of 2.8 million still live frugally in rural areas or are nomadic herders.
      China is undoubtedly a very significant market for Kone. The country's share of the global market for lifts and escalators is already 30 per cent and it is still rising, according to Kone's Asia-Pacific Area Director Pekka Kemppainen.


Previously in HS International Edition:
  Finpro: High demand for Finnish energy efficiency in China (27.4.2006)

Links:
  Kone Corporation
  Lhasa (Wikipedia)
  Tibet Autonomous Region (Wikipedia)

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