These managers have the greatest influence in Berlin

They accompanied Angela Merkel and today Olaf Scholz (SPD) on their trips to Beijing. In internal meetings, they present their view of China to the Chancellor or Vice-Chancellor, explain how important the huge market in the Far East is for their companies and outline their strategies for how politics and business should deal with China in the future.

So far, the thrust is clear: while the federal government is increasingly warning the German economy against becoming too dependent on China, the corporate leaders continue to invest in the giant empire, unperturbed. Recently, German investments there have risen to a new record level.

The Handelsblatt presents the heads of business who have the greatest influence on German China policy. And how they try to balance business and risk reduction.

Martin Brudermüller (BASF): The China Friend

When Chancellor Scholz flew to Beijing for his inaugural visit last November, this manager could not be missing from the Chancellor machine: BASF boss Martin Brudermüller.

Brudermüller himself lived and worked in China for a long time, he knows the country and politics and has good contacts, including at the local level. Under his leadership, BASF is building a new high-tech Verbund site in Zhanjiang with an investment volume of ten billion euros.

The plant is to produce plastics and specialty chemicals exclusively for the Chinese industry. However, the most controversial production site is in Korla in western China’s Xinjiang Province. In the region, the Chinese government is accused of massive human rights violations.

According to an internationally acclaimed study by the renowned Australian think tank Australian Strategic Policy Institute (ASPI), only a ten-minute drive away from the plant are several prisons in which members of Muslim minorities are imprisoned for the most trivial “offences” such as wearing a beard, under the pretext of fighting terrorism .

“As the largest chemical company in the world, we cannot say goodbye to the largest chemical market in the world,” says Brudermüller. In a few years, China will account for almost two-thirds of the global chemical market.

The commitment was analyzed in depth with many experts, says Brudermüller. “As a result, we rate the opportunities for BASF as significantly higher than the risks.”

Currently, 15 percent of BASF sales come from China, and the proportion is set to increase. Brudermüller sees China as compensation for the sluggish business at home. In a joint letter last year, together with other managers such as Siemens boss Roland Busch and Merck boss Belén Garijo, he called for a “continuation of the dialogue” with China.

However, investors are now also concerned whether BASF is taking too great a risk with its focus on China in view of geopolitics.

>> Read here: Sluggish economy, disappointment in China: chemical companies shock investors with profit warnings

And in Berlin, too, Brudermüller isn’t just making friends. Quite a few politicians say behind closed doors that Brudermüller is openly driving BASF into a devastating dependency.

Roland Busch (Siemens): Old love never rusts

Siemens has been active in China since 1872. Despite all the geopolitical uncertainties, CEO Roland Busch wants to continue expanding business – and at the same time reduce dependencies.

“The Chinese market is strong and will continue to grow,” Busch told Handelsblatt on the sidelines of a trip to China. Nobody can afford to let the chances lie. The market is very demanding and drives innovation – it’s important to be part of it. He considers a warlike escalation of the Taiwan conflict to be unlikely, since nobody has an interest in that.

Busch announced last week that it would increase the capacity of the Siemens automation plant in Chengdu by 40 percent. Busch had set up the “Marco Polo” project internally. One of the goals is to double the sales of the flagship segment “digital industries” in China.

However, according to supervisory board circles, the manager’s China euphoria has subsided over the past year and a half. In China, the main aim is to produce for China. Plans for the relocation of production, which according to information from the Handelsblatt have been played through, are off the table.

Instead, Busch repeatedly emphasizes the importance of resilience in the manufacturing network. “If there is a shutdown in a region – for whatever reason – it is good to have a second and possibly third production facility in other countries.”

That’s why Busch announced the construction of a new automation plant in Singapore last week. Emerging new markets such as India and Vietnam are to be supplied from here. In the past, says an insider, this would probably have been done from China.

>> Read here: Economy has high expectations of the government talks

Busch also exerts great influence on German China policy through another function: he is chairman of the Asia-Pacific Committee of German Business (APA).

Belén Garijo (Merck): Investing instead of foreclosure

The pharmaceutical company Merck also wants to continue investing in China. “We have no reason to believe that China is no longer an opportunity for us,” said Merck CEO Belén Garijo recently. Germany’s decoupling from China would take 20 years, “but for what?” Garijo said. Nevertheless, Merck is “prepared for the worst, even if it is unlikely”.

The company generates more than 14 percent of its sales of 22.3 billion euros in China.

In April 2022, Merck announced that it would invest around EUR 100 million over a period of six years in expanding its production site in Wuxi in the province of Jiangsu. In addition, in September Merck opened a new laboratory at its China Biologics Testing Center in Shanghai, in which Merck is investing EUR 29 million.

Further investments are also planned, for example in a new semiconductor site in Zhangjiagang. In addition, Merck has been cooperating with a Chinese biotech company since November.

Oliver Zipse (BMW): The China optimist

BMW is also heavily invested in China. The Munich-based company sells almost a third of its production in China and is significantly expanding its commitment. CEO Oliver Zipse maintains a very close exchange with the Chinese leadership and accompanied Chancellor Scholz on his state visit to China. Zipse also holds regular meetings with Chen Jining, the mayor of Beijing, whose technological expertise he values ​​very much.

Just last year, BMW was the first Western car manufacturer to take over the majority in its production joint venture with Brilliance and, unlike Mercedes or VW, it is allowed to fully consolidate its holding and act accordingly freely.

Björn Gulden (Adidas): The burned child

Adidas had to experience the consequences of being heavily dependent on China. Former boss Kasper Rorsted had big growth plans for the country. But when the shops were closed because of Corona and China initiated a boycott of western brands, sales of the brand with the three stripes collapsed drastically in the important market. In the end, Rorsted admitted: “Of course we made mistakes in China” – and had to go.

Successor Björn Gulden knows that the group will only get back on track if things get better in China. Among other things, he relies on more regional products with a Chinese touch.

There are teams in China that develop products for the local market. At the annual general meeting a few weeks ago, HR manager Amanda Rajkumar sat on the podium in a tracksuit with Chinese characters on the back. In the first quarter, however, Adidas sales in China fell again by nine percent, while Puma was able to increase China sales for the first time in a long time.

Oliver Blume (VW): The end of a high

No other German carmaker is as dependent on China as VW. The group, with its brands VW, Audi and Porsche, currently sells almost 40 percent of its annual production in the Asian country. How dependent the group is on the market is also shown by the fact that the carmaker is still holding on to an economically unprofitable plant in Xinjiang years later.

The Wolfsburg-based company has not only been heavily criticized for the work by human rights activists for years, but they do not want to close it for fear of political repression. The Chinese leadership needs corporations like VW in the region to show that the province is prospering economically.

However, the golden days for VW in China seem to be over anyway. After several decades, VW lost its market leadership in China to the still young BYD group in the spring because more electric cars are now being sold in the People’s Republic.

Despite the recent setback, VW believes its single most important market will continue to grow, from around 22 million vehicles today to between 28 and 30 million in 2030.

CEO Blume wants to continue growing in China, while following the German government’s “derisking” course: “Our strategy is now to develop significantly more in China for China.”

In this way, Blume wants to increase its market share in America and the Asean region. However, business in China should remain strong.

>> Read here: Experts skeptical about AI boom

In order to boost sales in the electrical sector, VW wants to combine vehicle and component development and procurement under the project name “100%TechCo” and thus speed up the development times of new cars by almost a third. There are also partnerships with local tech companies such as the AI ​​provider Horizon Robotics or the software company Thundersoft.

L Backovic, M Fasse, B Fröndhoff, M Greive, D Heide, A Höpner, Theresa Rauffmann

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