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Angela Merkel in China
Image: picture-alliance/dpa

Sieren's China

Frank Sieren / db
July 9, 2014

Chancellor Angela Merkel and her business delegation found that not all of their hopes for China will come true. But that's no reason to be annoyed, says DW columnist Frank Sieren.


Chancellor Angela Merkel arrived in Chengdu in southern China last Saturday (5.7.2014) with two dozen top managers in tow, including five heads of DAX-listed companies. Since Tuesday, the final day of Merkel's China visit, it's been evident that the large German business contingent made less of an impression on the Chinese than some of the members of the delegation had hoped.

In the end, the Chinese were not quite as open to everything the German business leaders had on their wish list as the Germans would have liked. Accords amounting to 3 billion euros ($4 billion) were signed, which is not bad at all. However, it's a relatively small package if you take into account the fact that China's Prime Minister Li Keqiang spread around more than 21 billion euros on his last trip to Britain three weeks ago.

Only Volkswagen and Airbus had reason to be pleased - and Airbus is half-French. VW and its Chinese partner FAW agreed on two additional plants in China, with investment of a billion euros each. Airbus secured a contract on the shipment of 100 helicopters worth about 300 million euros.

However, there were plenty of disappointments: Siemens failed to close deals with four major Chinese cities that would have brought the group orders into the three-digit million euro range. Germany's stock exchange failed to garner the bid to form a joint enterprise with the Shanghai stock exchange.

Complaints about conditions

Even more important than concrete deals: on the flight to China, Chancellor Merkel had enough time to listen to German business leaders' complaints.

Frank Sieren
Frank Sieren: China makes the rulesImage: Frank Sieren

Many feel the framework for business deals in China is unfair. Why, they wonder, can the Chinese buy practically every medium-sized German company they have an appetite for, while German corporations that want to do business in China are forced into joint ventures that flush a good deal of money into Chinese coffers.

VW chief Martin Winterkorn can tell you a thing or two about that. For years, he's been fighting for permission to found a wholly-owned subsidiary in China.

China dictates the pace

Understandably, the Chinese approach has been angering German managers. But it's not likely to change any time soon. Who can force China? Not even Europe's mightiest politician, Angela Merkel, has that power.

Beijing will open its economy at the pace it deems to be correct, and won't let the West dictate the rules. And it's worth noting that in the past, it has sometimes been to Western companies' advantage that Beijing has its own views on the topic.

Just take a look at China's financial sector. Don't bother thinking that the 2008 financial crisis would have ended if Chinese capital flows had been as liberal and linked to the rest of the world as Western bankers had long desired. The Chinese economy, too, would have been entangled in a deep crisis, and would have dropped away as a motor for the global economy - including for German enterprises. But since those companies still managed to reliably sell their goods to China even after the Lehman crash, they got off fairly lightly.

German firms make good money inChina

It's fine to clearly state one's point of view toward China, but it would be inappropriate to complain too much about the conditions there. After all, German firms make good money on the Chinese market. And that is bound to continue. Beijing no longer wants to be the world's workbench, it wants China to be more innovative - and the Germans are expected to help.

In effect, that means China wants to hold on to the German-Sino symbiosis, closely tested over two decades: exchanging Chinese market shares for Western technology. There's no way to prevent the Chinese from slowly turning into competitors for German manufacturers. But as long as the economy continues to grow, German companies will move forward. Over the next few years, Beijing envisions higher wages for the middle classes and plans to pull an additional 200 million people out of poverty in western China.

So, even if the Chinese continue to make the rules, consumption will continue to rise. For German companies, that means more competition - but also more opportunities for growth.

DW correspondent Frank Sieren is considered one of the leading German experts on China. He has lived in Beijing for the past 20 years.

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