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German companies thrive in China

Ruth Kirchner May 22, 2006

KAI RYSSDAL: German Chancellor Angela Merkel is in Beijing today. It’s her first visit since she was elected six months ago. Merkel and Chinese premier Wen Jiabao talked about Iran and human rights. But this is a business trip in the truest sense of the word. Germany is China’s biggest trading partner. The two do $63 billion worth of mutual buying and selling every year. And German companies are thriving in the Middle Kingdom. From Beijing, Ruth Kirchner has more.

RUTH KIRCHNER: Every night, customers at the Paulaner Brauhaus in Beijing enjoy German hospitality. Waitresses in traditional Bavarian dress serve large plates of roasted pork knuckle and huge mugs of German beer. The restaurant is a hit with the Chinese. And they, in turn, heap praise on Germany and its brands.

MAN 1: Mercedes, BMW, Audi . . . a lot of famous cars, a lot of machinery; for German people, they are quite precise and they are very good at technologies.

MAN 2: I like Adidas very much, that’s my main sportswear brand. It’s very practical and very good quality.

There’s no German equivalent to Starbucks or McDonalds, nevertheless Germany is highly visible in Beijing. Volkswagen, BMW and Mercedes all have their own plants here, though they hardly make profits. But Joerg Wuttke of the European Chamber of Commerce says, unlike some Americans, Germans are in China for the long haul.

American companies are far more subject to Wall Street opinion and they find it more difficult in this American pace of quarterly results to justify Chinese investments. Whereas Germans are not subject to this kind of scrutiny and probably are better positioned for medium or long-term projects as Americans are.

And Germans continue to extend their links with China. Liu Liqun of the Chinese Academy of Social Sciences says Germany’s economic woes have driven its China policy for years.

Liu says China and Germany cannot live without each other. China needs Germany’s high technology and investment. Germany, in turn, needs to stimulate its economy through trade. Therefore, it has to keep a close relationship with China.

When Germany’s foreign minister Frank-Walter Steinmeier visited China earlier this year, he talked a lot about something that is often missing in Sino-American relations — and that is trust.

But don’t just listen to what German politicians say, note what they don’t say. There are no complaints about any trade deficit. Joerg Wuttke says the low value of the Yuan is a not an issue.

JOERG WUTTKE: In Germany you don’t have this discussion because we don’t see China as a threat and so the discussion is not as politicized as it is in the US.

Privately, however, some commentators say there is another reason for the cozy business links. Germans, they say, complain far less about intellectual property rights violations and are more willing to share their technology. But Jutta Ludwig of the delegation of German Industry and Commerce in Beijing says, that’s a thing of the past.

JUTTA LUDWIG: Nowadays all German companies are very alert not to transfer and lose their technology here in China. This is a big item for us and we are really working on this to protect German companies here in China.

So, maybe German successes in China are down to personal chemistry. Maybe a shared passion for soccer helps along those thorny business negotiations. For Liu Liqun soccer is more than just a game. It’s a symbol for what the Chinese look for in their German business partners.

Liu says German soccer is a bit rigid and lacks imagination. But he says it’s a style that fits the German personality. They are serious, disciplined and always on time. And that’s what the Chinese like.

In Beijing, I am Ruth Kirchner for Marketplace.

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