EAC International Consulting’s Post

🌏  Germany’s Economic Pivot to Southeast Asia: Do All Roads Lead to China after All? 🇩🇪 🇨🇳 German chancellor Olaf Scholz’s recent visit to China underscores Germany’s challenge of reducing economic reliance on China while maintaining crucial trade ties. According to CHOICE authors Tim Hildebrandt and Julian Klose: ➡  Events like the COVID-19 pandemic and Russian aggressive war in Ukraine have prompted reassessment of risks, leading to a 30% decline in German investment in China in 2023. ➡  Yet despite “de-risking” strategies, German corporations like BASF continue with significant investments in China. ➡  Countries like Malaysia, Thailand, and Vietnam offer lower labor costs and less competition, attracting German businesses such as Porsche and Mercedes-Benz. ➡  However, despite Southeast Asia’s appeal, China’s manufacturing capabilities and logistical complexities make complete relocation to Southeast Asia challenging.Germany’s approach reflects the growing need to balance its economic interests with geopolitical realities. Southeast Asia offers opportunities for German businesses. However, the process of learning for the German companies that not all roads lead to China may be longer and more painful than anticipated. #Germany #China #SoutheastAsia #Trade #Geopolitics #Investment #SupplyChain

🌏 Strengthening Ties Amidst Challenges: Chancellor Scholz's Strategic Visit to China In an era of geopolitical tensions and competitive economic landscapes, German Chancellor Olaf Scholz's recent trip to China stands as a pivotal moment. Amid concerns over unfair competition and economic barriers that European companies face in China, Scholz's journey is a crucial step in bolstering German-Chinese economic relations. The Chancellor is accompanied by key figures from Germany's top industries including automotive giants and technological leaders. 🤝 Bridging Business and Cooperation: Scholz at BOSCH One of the highlights of Chancellor Scholz’s itinerary was his visit to the BOSCH hydrogen fuel cells plant in Chongqing, a city that has transformed from a lesser-known southwestern town into a bustling hub of innovation and economic growth. This highlights Germany's commitment to advancing green and sustainable technologies. 🌱 Fostering Sustainable Growth and Innovation The visit to BOSCH reflects a shared vision between Germany and China towards sustainable development. As both nations navigate the complexities of global supply chains and the pressing need for renewable energy solutions, collaborations like these are essential. 📊 Economic Realities and Mutual Interests Despite the backdrop of skepticism concerning China's economic stability and the broader implications for global markets, Scholz's visit signals a strong desire to understand the real economic landscape and explore areas of mutual benefit. With China remaining Germany's most significant trading partner for the eighth consecutive year, despite a drop in bilateral trade, the stakes are high. Both countries are keen on deepening their economic ties following a international business strategy. 🔄 Challenges On The Road Ahead The ongoing EU probe into subsidies for Chinese electric vehicle makers points to broader concerns about fair competition and market access—issues that are likely to be on the Chancellor’s agenda as he meets with top Chinese officials. ✨ A Commitment to Continued Dialogue and Cooperation Chancellor Scholz’s visit is a reaffirmation of Germany's strategic interests in China and enduring strength of their economic ties. As both countries navigate the challenges of a rapidly changing global landscape, continued dialogue and cooperation will be key to shaping a balanced and mutually beneficial relationship. #Germany #China #BOSCH #OlafScholz #innovation #ideation #GlobalImpact #SustainableDevelopment #RenewableEnergy #InternationalTrade #EconomicGrowth #GlobalEconomy #GermanBusiness #ChinaRelations

Writer,explaining miraculous economic achievements of China thinks: Behind international relations are always interests, and today's reversal of China-U.S. and China-West relations is no different. In the 1980s, the U.S. forced Japan to sign the Plaza Accord, employing policies such as market access, tariffs, and exchange rates to suppress Japan's economic rise. This led to three decades of stagnation for the country. Consider the data: in 1995, Japan's GDP was twice that of Germany, eight times that of China, four times that of the UK, and ten times that of South Korea. Japan's economy accounted for 73% of the U.S. GDP. A country with a population of 130 million had an economic scale reaching 73% of that of the U.S., and had completely surpassed the U.S. in the semiconductor industry—what an astonishing miracle! By 2022, however, everything had reversed. China's GDP is now 4.5 times that of Japan, and the U.S. is six times Japan's GDP. Japan is now 2.5 times larger than South Korea, and Germany has surpassed Japan. The Japanese electronics giants that once dominated China in the 1990s—Sony, Panasonic, Toshiba, Sharp, and Sanyo—are now a thing of the past. The Plaza Accord and the U.S.-Japan Semiconductor Agreement basically knocked Japan down Similarly, the competition in high-tech fields is not an ideological issue; at its core, it is a struggle for interests. If the United States could treat its close ally Japan as it did, what would it do to China? As former Singaporean Ambassador to the U.S. Chan Heng Chee said, the U.S. stance on high-tech industries is, essentially: "It is ours", emphasizing that these sectors are their exclusive domain, which cannot be automatically ceded. Over 20 years ago, renowned U.S. economist Paul Samuelson had a conversation with Peking University Professor Zhou Qiren. At that time, China could only produce clothing, shoes, and hats and engage in processing trade, while the U.S. dominated high-tech industries—this is why the trade model was often described as "700 million shirts in exchange for one Boeing aircraft," [800 million shirts for just one Airbus A380] where one shirt earned just one yuan. It was a mutually beneficial system with little conflict. Professor Zhou made a hypothetical: What would happen if China decided to manufacture large aircraft one day? Samuelson immediately responded, without hesitation, that it would be America's "permanent measurable loss. Thomas Friedman is a columnist for The New York Times and a proponent of globalization. His major work The World Is Flat once enjoyed immense popularity in China. Recently, he said: "When China sold us only shallow things, politically speaking, we didn't care whether China was authoritarian, communist, libertarian or vegetarian. It didn't matter because you were just selling us shallow goods." This is his exact quote. His version of globalization essentially seeks to position China as the West's cash cow....

Massive Chinese Investments Inject Billions of Euros into Hungary’s Economy. The Minister of Foreign Affairs and Trade, Péter Szijjártó announced in Beijing that Chinese companies are investing EUR 15.2B (HUF 6000B) in Hungary, aiming to create approximately 25 thousand new jobs and introduce advanced technological standards. During his visit, Minister Szijjártó held discussions with former Chinese Commerce Minister Zhong Shan, chairman of the Financial and Economic Committee of the National People’s Congress. He highlighted positive news about China’s economy, which expanded by over five percent last year and maintained this growth rate in the first quarter of the current year. Mr. Szijjártó emphasized that China’s economic performance not only benefits China but also significantly impacts Hungary, alongside the German economy. He pointed out that Hungary has become the primary destination for Chinese business investment in Europe, with EUR 15.2B (HUF 6000B) invested in the country, including ongoing factory construction projects. These investments are expected to generate 25,000 new jobs and bring advanced technology to Hungary, particularly in the automotive industry, where Chinese companies are global leaders. Péter Szijjártó also highlighted the positive trend in bilateral trade, which exceeded USD 10B last year and is anticipated to continue growing. Additionally, he noted the increasing presence of Hungarian companies in China, citing the success of the MVM (Hungarian energy supplier) subsidiary in securing significant investments. The Minister expressed optimism about future collaborations with major Chinese companies, aiming to further boost employment opportunities in Hungary. He also mentioned plans to discuss diplomatic relations with China on the occasion of their 75th anniversary. In conclusion, Mr. Szijjártó emphasized the mutual benefits of cooperation between China and Hungary in recent years, projecting a promising outlook for future collaborations. Related articleEconomic Relations with China Have Reached a New LevelMinister Mihály Varga met with his Chinese counterpart in Beijing.Continue reading Via MTI; Featured Image: Facebook / Szijjártó Péter The post Massive Chinese Investments Inject Billions of Euros into Hungary’s Economy appeared first on Hungary Today. https://lnkd.in/dvSpjnaR

We need a RESTART for Germany's competitiveness! 🇩🇪💪 Check out our newly released position paper for policy recommendations in key areas to RESTART Germany’s competitiveness from a transatlantic perspective: 🏭 R - Reforms 🍃 E - Energy ⚖️ S - Standards 💶 T - Tax 🤝 A - Alliances 🔗 R - Resilience 🚢 T - Trade Germany has been experiencing significant industrial changes for years, yet it remains Europe's largest economy. Our Transatlantic Business Barometer 2024, conducted together with Roland Berger, shows U.S. companies in Germany rate workforce quality, R&D and sales market potential highly. However, only about one-third find overall business conditions favorable. Negative factors include high energy costs, poor economic and industrial policy, digital infrastructure and investment planning difficulties. These issues threaten Germany's global competitiveness, economic growth and long-term prosperity, risking societal trust in the market economy and democracy. Political recognition of businesses' economic and social contributions is crucial. This is why Germany needs a competitive RESTART. Read our full position paper here (in German): https://lnkd.in/dcgG7aJm

German companies don't shy away from competition unless it's unfair. In our recent survey on German companies in China and their competitive landscape, two-thirds of respondents highlighted the presence of unfair competition. “They need to export products. So if they also lose the European Markets, it would be a certain threat for them”, Butek added. “Now the challenge for Scholz is to explain that to China”.  Check out more details about our survey on Bloomberg: https://lnkd.in/d_c6vg5C #OlafScholz #Scholz #China #economy #Germany #ScholzVisit

Chinese and German companies are increasingly becoming close competitors - both in China itself and in global markets. Our new survey shows the status quo - also informing the preparation of Chancellor Scholz' China visit: 🔸 German companies consider themselves superior to their Chinese competitors in terms of product quality, technological leadership, and innovation strength. 🔸 They rate their cost efficiency, time to market readiness, and innovation speed as weakest compared to Chinese competition. 🔸 Competitive disadvantages are particularly seen in market access and access to networks (e.g., government, local authorities, access to public tenders, etc.). 🔸 The heightened competition is expected to cause increased cost pressures, reduced profit margins, and lower market shares. 🔸 Two-thirds of the surveyed companies say they are affected by unfair competition. The unfair competition situation together with specific examples will be brought to the attention of the Chinese leadership during Chancellor Scholz' visit and beyond. #china #competition #advocacy #AHK #GermanChamber

To me Germany is actually anticipating what others will do later on, short of open conflict. Same direction taken by Italy, with its attempt to reboot relations with China after the much debated withdrawal from the BRI. Most likely, both countries will keep an extra eye towards containment, while trying to maximize trade opportunities. Which makes sound sense. __________________________________ When Germany’s chancellor, Olaf Scholz, took office in 2021, he pledged that his government would shift his country’s relationship with China away from one of economic dependence. Three years later, talk of scaling back reliance on China has been replaced with calls for equal access to China’s market for foreign firms. That strategy puts the Germans at odds with many of their closest allies, including the United States and other European countries, which would like to see China scale back its recent surge of exports in the green energy sector, including electric vehicles. The U.S. Treasury secretary, Janet L. Yellen, has talked about imposing trade restrictions on China. https://lnkd.in/gEri7FFv

🚗 German Investment in China Surges. Is Supply Chain Diversification working? 🚗 Despite strong calls from the German government to diversify away from China, why are German companies doubling down on their investments in the world's second-largest economy? In the first half of 2024 alone, German direct investment in China soared to an impressive €7.3 billion—already surpassing the entire total of €6.5 billion for 2023. 📈 This surge is largely driven by major players in the automotive industry like Volkswagen and BMW, who are increasingly adopting an "In China, for China" strategy. They're shifting more production to China, focusing on local manufacturing to cater to one of their biggest and most lucrative markets. 🇨🇳 However, this move comes at a time when geopolitical tensions are escalating, particularly around the Taiwan Strait. 🌏 Many in Europe worry that German businesses haven't fully learned the lessons from the Ukraine war, where over-reliance on Russian gas proved costly. There are concerns that deepening ties with China could expose Germany to similar risks, especially if tensions in Asia boil over. The reluctance to diversify is not just risky; it’s potentially harmful to Germany’s long-term economic security. 🛠️ By shifting production to China, these companies are not only increasing their vulnerability to external shocks but also undermining the German economy. Jobs and production are moving overseas, weakening Germany’s industrial base and leaving the country more exposed to the whims of a single, increasingly unpredictable market. Despite these risks, German investment in China shows no signs of slowing down. Recent big-ticket announcements, such as Volkswagen’s €2.5 billion investment in Hefei and BMW’s €2.5 billion expansion in Shenyang, underline the continued strong momentum. 🚀 The German government has been urging companies to diversify their supply chains and reduce their vulnerability to external shocks. But so far, these warnings seem to be falling on deaf ears, especially among the big carmakers. As German investments in China continue to grow, the debate over how to balance economic opportunity with geopolitical risk is only set to intensify. 🧐 What do you think? Share your thoughts! 💬 #Germany #China #investment