China an unprecedented fault line among German employers

China, an unprecedented fault line among German employers

It was February 21, three days before the Russian attack on Ukraine. Le Monde had an appointment with Martin Brudermüller, head of German chemical giant BASF, in Ludwigshafen (Rhineland-Palatinate), the group’s headquarters, in the heart of Europe’s largest chemical complex. During the interview, Russia was discussed, but especially China, where BASF has to invest 10 billion euros in Zhanjiang in Guangdong Province (southeast) by 2030 in order to set up a new production site there.

Isn’t it risky, we asked then, to invest such a sum in a country with declared geopolitical ambitions, multiplying signs of hostility towards the West? Mr. Brudermüller replied with the relentless authority of numbers: “In 2030, China will account for 50% of the world chemical market. If you want to be a global chemical giant, you can’t say half the market isn’t for you. »

Nine months later, while the war in Ukraine and Chinese threats against Taiwan have led to a sharp increase in geopolitical risk, the same question poses itself, even more acutely, for the entire German economy. The planned visit of German Chancellor Olaf Scholz to Beijing on Friday, November 4th is politically controversial as well as logistically delicate.

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For health reasons, the service plane was to take off that same evening. Out of a hundred applications, only twelve business representatives were accredited, a far cry from the large delegations of the Merkel era. The head of BASF will be on the trip, as will Oliver Blume, the new head of Volkswagen (VW), Roland Busch, from Siemens, Christian Sewing, from Deutsche Bank, the heads of BMW, Bayer, Adidas and Merck or a Representative of the BioNTech laboratory.

Two clearly visible fronts

More surprising is the list of those who declined the invitation: manufacturers Mercedes and Daimler Truck, equipment makers Bosch, Continental and Schaeffler, and even the Federation of German Industries (BDI), the influential association of industrialists. If the real reasons for these absences are not known, there is no better example of the dilemma German companies face when faced with China, a long-preferred market for “Made in Germany” due to its dynamic growth and strong profitability. .

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China has been Germany’s largest trading partner for six years. In 2021, it was its first supplier and second export market, well behind the United States. Across the Rhine, a million jobs depend directly on exports to Beijing. But Covid-19 and the war in Ukraine have opened a new era in German capitalism. Two clearly visible fronts have formed. On the one hand, there are the large groups that are often systemically important for Germany and that believe that a world-class industrialist cannot isolate himself from China.

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