On the cusp of the G20 summit in Hamburg, Beijing Review interviewed Alexandra Voss, Delegate of German Industry at the German Chamber of Commerce in Beijing, and discussed with her Sino-German economic cooperation as well as the expectations and experiences of German companies in China.
Beijing Review: German Chancellor Angela Merkel recently said that "even holding on to what has been achieved so far" is sometimes a success. Do you think that decisive breakthroughs can be achieved at the summit in Hamburg?
Alexandra Voss: It is indeed the case that the G20 summit this year takes place in an environment of increasing uncertainty. This uncertainty was caused for example by Brexit and the change of leadership in the U.S., foreclosure trends in other parts of the world, major challenges in climate protection, and concerns about migration in Europe. The G20 summit will therefore be an important opportunity. Precisely because the challenges are so big, it is now particularly important to keep talking with each other: more dialogue, more cooperation. None of the major problems can be solved by one nation alone!
Decisions by the G20 could also influence German companies. What kind of decisions in the areas of free trade and climate protection do you hope for?
We hope to strengthen cooperation in the areas you mentioned. Free trade is of course a very important topic for German industry and for Germany as an export nation. Also, we hope for more cooperation policies when it comes to climate change. German companies are leaders in many areas of environmental technology and renewable energy. From the point of view of the German economy, we want to use the G20 summit and relevant discussions to serve as a model and a positive example on how to play an active role in shaping globalization through positive contributions.
Could you give our readers an overview of the economic cooperation between China and Germany?
Economic relations between Germany and China are going very well. In the last year, we saw China become Germany's most important trade partner in the world for the first time, overtaking the United States. With a volume of 170 billion euros ($193 billion), we witnessed a new record in Sino-German trade. German investments in China continue to increase. According to figures published by the Chinese Ministry of Commerce, German companies invested $2.7 billion in China in the past year. This was a significant increase over the previous year. Vice versa, Chinese investment in Germany increased considerably—according to the Chinese Chamber of Commerce in Germany, Chinese companies invested 2.9 billion euros ($3.3 billion). However, there are also some unresolved issues between the two nations, such as market access and the equal rights of companies. These concerns were discussed during Chinese Premier Li Keqiang's visit to Berlin a few weeks ago.
How would you describe the general business relations between Chinese and German enterprises?
In general, the business relationships are very good. Many of the German companies in China have been here for many years now and have a relationship of trust with their partners and customers. They know each other, have built common networks and work together on topics regarding the future. At the same time, there is a whole range of areas in which we hope for further improvements. There are still a number of sectors in which market access restrictions for German and other foreign companies exist. These include involuntary technology transfer, compulsory joint ventures, problems in the area of public procurement, product approvals, the protection of intellectual property rights—in short: there is still a lot to do. The subject of equal treatment is a very important one for us.
How will companies from China and Germany benefit from their cooperation?
Well, in the ideal case cooperation would be of benefit to both sides. Lately, we have seen a strong increase in the competitive situation between German and Chinese companies. This is a completely normal development, though: There are many Chinese companies now which are very successful and innovative. But the fact that German and foreign companies in general are being treated differently from Chinese companies plays a role, too. Particularly against the backdrop of the expansion of the successful Chinese companies in Germany and around the world, the issue of equal treatment is of special urgency for us.
In which sectors of the economy and industry do you see the best opportunities for win-win cooperation?
China's economy has been in the process of transformation for some time now: Its industry is being modernized to improve the quality of production. German machine manufacturers—many of them medium-sized businesses—could contribute a lot to this endeavor. Energy efficiency in production, new solutions for urbanization and mobility—these are all areas in which win-win cooperation is very much possible. There are also areas in which Chinese companies are at the forefront, for example in the area of information and communication technology or even in e-commerce. This is very interesting for German companies, especially those from the consumer goods sector, as well as for service and logistics companies, which could use these platforms to create their own sales structures in China. The ever-changing conditions in China could force them to adapt and go new ways.
China wants to modernize its industry, and it wants to do so in cooperation with other countries. What does Germany have to offer?
German companies have a reputation worldwide for being market leaders in the field of the automation of production processes. German companies have a lot of knowledge and experience in this area, and the majority of innovations for Industry 4.0 have been developed by German companies. Germany and China are a good match in this regard: China with its attempts to restructure and modernize its industry—Germany with its technologies and concepts for the future, such as Industry 4.0. It is very important for me to point out once again that Chinese companies offer interesting products and solutions in this area, too. These technologies could be jointly developed with German companies.
German companies already have advanced technology for Industry 4.0. The demand from China offers unique opportunities to German providers of these technologies. But where there are great opportunities, there are almost always great risks, too. Do you see any risks in this cooperation?
Yes, we see risks. Automation, intelligent factories—there are major opportunities for German companies in these areas. But we also see risks associated with the development of China itself. In its very important industrial development program "Made in China 2025," the Chinese leadership has very clearly established that Chinese companies in relevant areas are to be set up to be global industry leaders. This is a development which German companies need to monitor very closely—to ensure that they stay one step ahead of the competition when it comes to innovation.
Other risks relate to the issues of data security, free data traffic across borders and compliance with different standards—we would like to see further progress in these areas. The concept of the smart factory can only work if it is achieved in an environment in which the property is protected and in which sensitive data can be handled accordingly. In this context, we also need to talk about topics like Internet restrictions and the slow speed of the Internet in China.
Trust is the most important factor for successful cooperation in terms of Industry 4.0. This requires reliable framework conditions and equal market access for German companies in China.
Copyedited by Bryan Michael Galvan
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