My name is Alexander Husebye and I am CEO of the Centre of Business History in Stockholm. We preserve and present business history, on assignment both from

individual companies and by the Swedish business sector at large.

Today, I want to share with you a story linked to today’s programme. It’s about two great cities connecting to each other during a most fruitful period of free trade. It is also a success story about a then relatively small company from an export driven country in the European north which takes its first steps out on a global market. And last but not

least it is a story of what can be achieved by individuals, given the right time and circumstances.

”Stockholm calling Shanghai!”Your Royal Highness. Honored Guests.

Alexander Husebye @ Världshandelsdagen 2014Stockholm Chamber of Commerce, 28 Aug 2014

”Stockholm calling Shanghai!”

Let me start with a letter. I know it’s hard to see, so let me read out aloud:

”With your excellent manufacturing and the recognition and the grasp on the world market that you have achieved, L M Ericsson mechanical engineering workshop should become one of the largest in the world, a world power. ”

This letter is over 100 years old. And it comes from the other side of the globe. From Shanghai, China.

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The author’s name was Gustaf Öberg. Sea captain, businessman and adventurer. Lobbyist and telephony visionary. All of these ideal qualifications for becoming Ericsson's first general agent in the Chinese market at the end of the nineteenth century.

As a sea captain, Öberg sailed up and down the Chinese coast for many years during the 1880s. During this period, he also took the opportunity to establish himself as a businessman in Asia. He lived in Shanghai some of the time, but also in Hai Phong, in what was then Indo-China and today is Vietnam.

Indo-China was tough on Öberg. The French, who had colonised Indo-China, arrested him on charges of selling arms to guerrilla groups. His assets were confiscated and he was sentenced to death.

Miraculously, however, Öberg managed to escape from prison and out of Indo China, disguised in the traditional garb of a Chinese labourer. He was eventually cleared of the arms smuggling charges. Having escaped from prison, and the impending execution, he wrote a Christmas card to his young family in Stockholm who hadn’t heard of him for two years stating “I´m still alive, Merry Christmas to you”... He then established himself ashore as a business man in the growing city of Shanghai.

I’ve called my talk today “Stockholm Calling Shanghai”. But perhaps it should have been the other way around. Because in fact, it was Öberg himself who took the initiative to start selling Ericsson telephones and other equipment in the city.

As the letter I read to you earlier made clear, Öberg was convinced that L M Ericsson mechanical engineering workshop as the company was called at that time, had a brilliant future in Shanghai – and worldwide.

Speaking of Ericsson. It all began when Lars Magnus Ericsson in 1876 started his workshop in a shed in a backyard quite nearby on Drottninggatan in Stockholm. The business grew enormously and only twenty years later Ericsson were represented on several continents including Africa and Australia. There were around fifteen hundred employees, and the turnover was around 4 million Swedish crowns.

At the Stockholm World Exhibition in 1896, inaugurated by your Royal Highness’ Great-Great-Great-Great Grandfather Oscar II, Ericsson, together with other Swedish companies, boasted their products with pride. This was first of several high times of Swedish exports.

We go back to China and Shanghai in the 1890´s. Following the Shanghai launch of its products, sales of Ericsson telephones and other equipment were initially slow.

The telephone operator in Shanghai at the time was the British Oriental Telephone Company. They were not particularly interested in Ericsson's Swedish produced telephones. But neither did they appear especially interested in their concession to operate the telephone network in the city of Shanghai. When the time came for renegotiations with the Cantonese authorities in 1900, Gustaf Öberg proved to be a very aggressive and successful lobbyist for bringing in a new operator, Ericsson. For example, one of his arguments was to compare how things were run in the very faraway city of Stockholm.

Oberg’s efforts resulted in the formation of a new operator – the Shanghai Mutual Telephone Company . And, as it happened, with himself as managing director!

But wait a moment! What was so compelling about the argument that Stockholm on the other side of the globe was such a model for the Chinese decision makers? Well in the middle of 1890´s Stockholm was the most densely telephone equipped city of the world! And the central telephone Exchange, seen here on its location at Brunkebergs Torg was the largest of them all.

Back in China, the time for developing telephony in Shanghai was ripe for the Shanghai Mutual Telephone Company to enter the stage, and the business really took off. The first task was to build a new telephone exchange in the city. And then carry out a campaign to attract subscribers. Once again Öberg's persuasive skills were successful. ‘

To enable further expansion, the company soon needed to extend and improve the telephone network in Shanghai. Yet again Öberg turned to Ericsson for their expertise. There was just one snag. Ericsson had never built a telephone network in such a distant premise!

Finding expertise from outside was no easy matter. That is clear from a letter from Lars Magnus Ericsson to his wife Hilda Ericsson in November 1900. Lars Magnus had long believed it to be impossible to find a Swedish engineer who also was willing to travel to the other side of the globe. But finally he found that person: Fridolf Langton of Gothenburg, who was prepared to do what at first, seemed impossible.

It has to be said - and I always take the opportunity to do that – that Lars Magnus Ericsson and his wife Hilda were a true power couple among Swedish entrepreneurs. And their correspondence are among the best examples of doing business by love letters.

With Fridolf Langton aboard in Shanghai the business now really took off. Öberg started building a central exchange and a large office. He documented the construction process carefully, with numerous photographs. Initially, Öberg's belief in the Chinese market was significantly stronger than Lars Magnus Eriksson’s. Ericsson as a company was fully occupied conquering other parts of the world. But Öberg's persuasiveness once again bore fruit.

Chinese representatives were so interested in Swedish telephony that in 1905 they sent a large delegation all the way to Stockholm and Ericsson to study installations. And, presumably, to confirm that there was now a business relationship. This particular moment was documented in pictures like this taken in Ericsson's magnificent boardroom at Tulegatan in Stockholm

…and all the Chinese signed the company's visitors' book. I am showing this list of names because today, a century later, it is one of Ericsson's best examples of sustainability in customer relations and good customer care. I think that Mr. Ulf Pehrson who will speak later this afternoon could verify the impact it does today to have such a history.

Meanwhile, interest in the market in the Middle Kingdom was growing. In 1913, Ericsson began supplying equipment for Guangzhou's telephone network too, and negotiations for Beijing's started. But nothing came of it - for any of the players. Because the First World War put an end to free trade and trade between Sweden and China. Gustaf Öberg, however, stayed in China until his death in 1920. By then he was a much respected businessman. Here we can see him decorated with both the Swedish Order of Vasa and the Imperial Order of the Double Dragon.

Ericsson had no presence in China for several decades. The Japanese bombing of the country in the 1930s, the Second World War and the creation of the People's Republic of China meant the market was closed to foreign companies. The picture shows equipment being tested in Shanghai in 1928. It would be almost 50 years before Ericsson would resume business with China again.

A new dawn came in the 1980s. China’s change of direction towards a more business-led economy, initiated by the Communist Party’s general secretary Deng Xiaoping, made it easier for foreign companies to operate in China. As early as 1979, China's Vice Premier visited Ericsson to learn more about the ej ex i system, which already had begun its success across the world. The picture shows him with Björn Svedberg, Ericsson's CEO at the time.

And today, Stockholm and Shanghai connected again on several levels; communications equipment but also research and development. China's first mobile phone system was delivered in 1985 and before long Ericsson also won a really huge order for Shanghai. This brought Ericsson back to the city where it all started, almost a hundred years earlier. And to that, research laboratories were established in several cities around China.

Incidentally, the very first mobile phone call in Shanghai was connected with equipment from Ericsson.

Ladies and gentlemen, it will soon be 120 years since the first cargos from Stockholm with Ericsson telephones came ashore in Shanghai. The market that Ericsson first thought was too far away has today acquired unheard-of significance for the company. – But let us stay true to history - Captain Gustaf Öberg already knew that this would happen.

Of course there is the difference of the scale of business. The Ericsson that now operates globally has grown from the 1500 employees of the 1890s to over 114,000, and with local representation in over 130 countries

What can we learn from this history? Well, Sweden and Swedish companies for sure have a great and unique history in taking on challenges in a constantly changing world regardless of time and geographical distance. In this story, you also find the individual’s importance to progress business and trade. There is also communication technology as one of Sweden's and Stockholm´s most important sectors, where we have a long relationship with countries such as China. And last but not least, there is the importance of free trade for export-led countries such as Sweden with its many smart technology-led companies.

Again, my thanks to the organizers for allowing me to share this story with you. And my thanks to you all for your patience and kind attention.

Alexander Husebye, CEO and Presidentalexander.husebye@naringslivshistoria.sewww.naringslivshistoria.se