It’s just a short visit, but the whole world is watching. For almost three years now, since the corona outbreak in Wuhan at the end of 2019, he has been Chancellor Olaf Scholz (64; SPD) will be the first representative of a liberal democracy to be received by Chinese head of state Xi Jinping (69) this Friday. In view of the geopolitical tensions, difficult issues are at stake – including the relationship to China was anything but relaxed lately. Central topic among other things: the future economic cooperation.
So there is one on the government plane whole guard of German top managers. Twelve selected women and men received a ticket for the special flight from Berlin to Beijing. And just like for Scholz, it’s a tricky trip for her too.
While previous state visits to the second largest economy in the world often focused on new deals worth billions, fundamental questions are now being asked. Essentially: How dependent is German industry on China? And how dangerous is that? The political debate had public and in the companies themselves
recently gained a lot of sharpness, even a possible one splitting up of the corporations
is being discussed if they want to stay in business in China.
There are no short-term alternatives to China anyway, as the Federation of German Industries (BDI) reports on request. “It is in Germany’s interest if our industry continues to cooperate economically with China. Mutual trade and investments ensure our stability and our prosperity. Politically and economically, decoupling from the People’s Republic is neither desirable nor sensible,” said the BDI, its boss Siegfried Russwurm (59) does not belong to the tour group. Fundamental doubts about economic relations with China are the wrong conclusion, even in the context of the new system competition, but: “The answer to economic dependency is resilience.” The companies are already in the process of diversifying their sales and procurement markets. It just doesn’t happen overnight.
Just looking at the tour group gathered around Scholz shows how close the relationship between the companies and China is and how complicated the situation is.
BASF: The China fan
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Ready for dialogue: BASF CEO Martin Brudermüller will be part of the delegation
Photo: Uwe Anspach/dpa
Almost needless to say that BASFboss Martin Brudermüller (61) will go on a one-day tour with Scholz. When presenting the quarterly figures of the world’s largest chemical group, he recently expressed his anticipation: “The upcoming trip is a good signal for the willingness to enter into dialogue with China,” said the manager.
China is about a lot for him and his company. He wants to build ten billion euros in China by 2030. Shortly before the start of the corona pandemic, he had inaugurated his huge new plant in Zhanjiang, southern China. “The mega project will continue the success of our Asia strategy,” says Brudermüller with conviction. But internally the course had recently triggered a culture war
: The boss would hand over the chemical company to the Chinese, warned top managers. The influential union boss and BASF supervisory board member Michael Vassiliadis (69) even warned, BASF is publicly making itself the “frontrunner” in German industry for a continuation of the previous China strategy. “I warn against putting everything on one card and underestimating the geopolitical risks.”
Brudermüller, meanwhile, doesn’t think much of China bashing, as he calls it. He expects further growth and wants to continue investing there. “All in all, we come to the conclusion that it is advantageous to expand our involvement there.” His interlocutors in Beijing will be happy about that.
Merck: The Science Expeditionary
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Single-use boom in China: Merck CEO Belén Garijo will accompany Scholz on his journey
Photo: Markus Scholz / dpa
Also Merck-CEO Belén Garijo (62) will accompany Scholz on his journey and thus represent a company that has been active in China for almost 90 years. The science and technology group currently employs around 4,600 people at eleven locations in China. In 2021, the company achieved sales of 2.9 billion euros in the country – this corresponded to a share of almost 15 percent. “We are aware of the current geopolitical challenges. At the same time, we are convinced that the government and business must remain in direct and constructive dialogue with China,” the company explained on request before the start of the trip.
With support from the Chinese government, Merck has been serving academic, biopharmaceutical and diagnostics manufacturers through its life science business for more than two decades. According to its own statements, the Darmstadt group intends to invest around 100 million euros over a period of six years in the expansion of the existing production site in Wuxi. This should significantly increase the capacities for the production of so-called single-use products, assemblies for one-time use in biopharmaceutical production. The company announced that the bioprocessing market in China will grow at an above-average annual rate of more than 20 percent over the next five years.
Volkswagen: The restorer
Fastest-growing automotive market: VW boss Oliver Blume will take part as a member of the business delegation
Photo: Michael Kappeler/ dpa
At the invitation of the Federal Chancellor, Volkswagenboss Oliver Blume (54) as a member of the business delegation, as the company confirms. Due to the corona pandemic, there have been no direct encounters on site for almost three years. Beijing now offers the opportunity for a personal exchange of views. flower will be according to one Volkswagen-Use speakers at the meeting for more independence and diversification. However, deglobalization and decoupling are the wrong answers to the crisis.
For the largest German car manufacturer, China, where Volkswagen has been active for 40 years, is still the most important single market. The success of the entire group depends heavily on it – from January to September this year, the group sold 39 percent of all new cars in the People’s Republic. There are more than 30 plants in China employing more than 90,000 people. Massive sales problems had therefore recently in Wolfsburg all the alarm bells went off
shrill.
The Chinese market is “by far the largest and, in perspective, the fastest growing automotive market – especially in electromobility and in the development of technologies for autonomous driving,” said the spokesman before the start of the trip. In order not to be decoupled from these developments, it is essential to continue to have a local presence in this market. Volkswagen not only intends to maintain its market position there, but to further expand it. Blume wants to invest even more in technological developments on site – in order to secure the German locations in the future with profits there.
BMW: The China addicts
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More than a third direct investments: BMW boss Oliver Zipse sees China as one of the most important trading partners
Photo: Tobias Hase/DPA
The car manufacturer is also on the list of companies traveling with you bmw
It was unclear until the end whether CEO Oliver Zipse (58) was flying himself. The carmaker does not want to comment on the travel plans. But one thing is clear: together with Volkswagen, BASF and Mercedes, BMW accounts for more than a third of all European direct investments in China between 2018 and 2021. The big three of the German automotive industry sell almost five million vehicles there, and together they earn around 20 billion euros in the People’s Republic every year.
BMW has held 75 percent of the joint venture BMW Brilliance with Chinese partner Brilliance since February. The carmaker also has an engine and battery factory in China. Last year, BMW sold around 846,000 cars in China – around one in three that the group sold worldwide.
Hipp: The winners of the new family policy
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Family entrepreneur: Claus Hipp benefits from the baby boom in China
Photo: DPA
Even with the medium-sized company Hipp, it is not clear who exactly is flying. The fact is: the manufacturer of baby food with its German headquarters in Pfaffenhofen an der Ilm in Upper Bavaria has one of the most important sales markets in China. Foreign manufacturers are in demand there. After several food scandals, the Chinese are spending billions on baby food from foreign companies. Powdered milk in particular is in great demand since more than 300,000 small children became ill in 2008 after being fed contaminated powdered milk.
And another factor should be the business of the Hipp family, which is currently among the 200 richest Germans
counts, keep cranking. With the end of China’s one-child policy, millions of babies may soon need even more food. Hip also benefits from this. However, the company did not want to comment on the upcoming trip when asked.
Biontech: The slowed down
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Vaccine approval: Biontech CEO Ugur Sahin had China in mind early on
Photo: FABIAN BIMMER / REUTERS
Participation of a Biontech Biontech reached an agreement with the Chinese company Fosun Pharma at the end of 2020 – even before the later deal with the US giant Pfizer
, which envisaged a delivery of 100 million doses. However, to date, the company has not received any approval. In China only vaccines from their own country are allowed.
Biontech has been saying the same thing publicly for a long time: Approval is entirely at the discretion of the Chinese authorities and talks are in progress. The visit to Beijing could possibly get things moving.
Bayer: The pharmaceutical giant
Big in China: Bayer boss Werner Baumann is trying to strengthen the market position in China
Photo: Sepp Spiegl / imago images
The pharmaceutical company from Leverkusen has an important foothold in China. In 2014, the company invested around 100 million euros in its production capacities in Beijing to cover the demand for German medicines. In May 2022, China’s drug authority NMPA last allowed that Bayer-Drug Verquvo too. It is used to treat patients with chronic heart failure.
Bayer does not report direct sales figures for China. However, the Asia/Pacific region, which also includes China, is one of the most important future markets with its “enormous growth potential”. In 2021, Bayer generated sales of around 8.8 billion euros here with around a fifth of all global employees – that also corresponded to more than a fifth.
In China, Bayer is one of the largest international pharmaceutical companies with production sites in Beijing, Guangzhou, Chengdu and Qidong. In addition to medicines, Bayer’s crop protection products are also in demand on the Asian market. Whether CEO Werner Baumann (60) flies himself? The company only explained that it did not want to comment on the appointment calendar of the management.
Siemens: The oldest trading partner
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Good connections: Siemes boss Roland Busch, here with Olaf Scholz, is currently working on a mega project in China
Photo:
Clemens Bilan / EPO
SiemensBoss Roland Busch (57) is definitely on the plane with Scholz. Siemens has been active in China since 1872 and currently has particularly big plans in the country. Of the total of 17.9 billion euros in sales in the third quarter of 2022, the company made 2.3 billion euros in the country. Busch is now working on the “Marco Polo” project. According to information from the “Handelsblatt”, research and administration in the important “Digital Industries” division in China are to be strengthened. By 2025, the division’s sales are expected to double compared to 2020. These are ambitious plans, for which good connections to Beijing can never hurt.
However, Busch is still involved in a second role. He is chairman of the Asia-Pacific Committee of German Business (APA) and thus partly represents the interests of the entire industry and the BDI.
Deutsche Bank: The quarreler
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After an initial collision with the appointment calendar: Deutsche Bank boss Christian Sewing is traveling with us
Photo: IMAGO/Mike Schmidt
It was initially unclear that the CEO of Deutsche Bank would fly with him. There was talk of collisions in the appointment calendar. Christian Sewing (52) was one of those German CEOs who had been openly critical of China. China cannot be equated with Russia, he said. But the country’s growing isolation, the increasing tensions with the USA and the close ties between the German economy and China are problematic. Every company should start considering what alternatives it has.
Now it’s easy for the man to talk. In 2021, the bank only collected a pre-tax profit of 89 million euros in China – in India alone it was five times as much. The company did not want to reveal in advance what exactly he would like to discuss in China.
Wacker: Chemistry with China
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The chemistry is right: CEO Christian Hartel (2nd from right) in November 2022 with Federal Minister of Economics Robert Habeck
Photo: Sebastian Willnow / dpa
CEO of the Munich chemical group Wacker, Christian Hartel (51), is likely to have special interests in the China business: in 2021, Wacker took over 60 percent of the Chinese silicone manufacturer Sico Performance Material for 120 million euros. As a result, Wacker also produces the silicones at the plant in Wuxi, near Shanghai. The company’s main customers are the construction, automotive, semiconductor and electronics industries.
The Wacker plant in Zhangjiagang has been one of the Group’s largest production sites for years. The fast-growing Asian markets are served from here with state-of-the-art finished products.
Adidas: The sports giant
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Lockdown problems: Adidas CEO Kasper Rorsted is facing an economic slowdown in China
Photo: Sven Simon / IMAGO
once belonged among the most popular western brands in China. In 2008, the group opened what was then the world’s largest flagship store in Beijing. Many more openings in China’s million metropolises followed. In the meantime, however, CEO Kasper Rorsted (60) has a real problem with China.
Since the government’s tough zero-Covid line, it’s been next to impossible for many to shop in stores. The economic slowdown in China agrees with the sporting goods manufacturer Adidas more careful. The group had to issue profit warnings for 2022 several times, especially in China things are not going as hoped. While the Rorsted group still had sales of 4.6 billion euros in the country in 2021, it should now be significantly less. Nike’s competitor in the People’s Republic is forecasting for the year as a whole with a drop in sales in the double-digit percentage range.
So there are enough topics in Beijing, but Adidas does not comment on the trip.
Geo Clima Design: The surprise guest
And then there is Antje Vargas on board the chancellor plane. She is the head of Geo Clima Design, a German manufacturer of capillary tube systems for heating and cooling. The company from Fürstenwalde in Brandenburg is one of the surprising participants on the Federal Chancellor’s travel list. The company does not want to comment on the trip and the upcoming negotiations in China.