China – Competitor and Partner
Bettina Schön-Behazin, Chairwoman of the German Chamber of Commerce in Shanghai
China offers successful technology companies, state-of-the-art strategies for electromobility and smart manufacturing, start-ups and increasingly more STEM graduates. Germany should see this as an opportunity.
The Chinese digital economy and its technology companies are very successful despite slower economic growth. One reason for this are the intensive investments in research and development and government subsidies. The ever-growing start-up scene is also impressive. According to the latest figures, 18,000 new companies are registered in China every day, which is about four million a year. Not all are highly innovative, but if only a fraction of this is competitive, then that makes a few thousand new success stories every year.
Extensive digitization of everyday life
Within the huge Chinese domestic market, digital business models are scaling at a similar rate as in the English-speaking world – often even faster. China has especially come very far in the digitization of everyday life and has simply skipped some technological intermediate steps. With WeChat, for example, mobile payment has completely penetrated day-to-day life and almost completely replaced cash.
One reason for the digital boom is a different attitude towards privacy and data protection than in Europe. This has led Chinese digital companies to gather huge amounts of data and analyze them without being disturbed. Also, the use of artificial intelligence and facial recognition technologies are accepted by the Chinese, as they ensure security – according to the official explanation.
While the digital economy is now at a global level, traditional industries are lagging behind, especially in electrical engineering, mechanical and plant engineering. There are some lighthouses that produce with high standards and in a largely automated manner. But there are also many companies that do not even use ERP systems.
The race to catch up is not over yet
Also, the university system shows that China’s race to catch up is not over yet. Although it produces about eight million graduates annually, about three million of which are engineers, the universities overall are rather mediocre. The greatest disadvantage is their purely theoretical orientation. International networking is sparse and there is hardly any cooperation with companies or research
At the moment, many talents are studying abroad. But unlike in the past, they often return to China, as they have great opportunities in the ever-growing start-up scene. And European experts are also active in China. A notable example are former coworkers from a German automobile manufacturer, who are developing the electric car start-up Byton in China. China recruits the best minds and tries to attract experts from all over the world to meet its demand for highly skilled talent.
Overall, the Chinese economy still has a great deal of catching up to do in industrial automation. That is why it is looking for partners around the world with experience in robotics, Industry 4.0 and Industrial IoT. Germany is still considered a leader in these areas. Because China is undergoing a process of change, there are many possible connections for German expertise. China’s recent foreign investment reforms are another step in the right direction, addressing foreign companies’ concerns about forced technology transfer, intellectual property protection and public procurement. However, it remains to be seen, how these will be implemented. The crucial point it to have equal and transparent rules for all market participants.