Prof. Sebastian Heilmann warns German industry of the “turkey trap” at an event for Staufen AG
Declining growth and high margin pressure are what Sebastian Heilmann, one of Germany’s leading experts on China, is predicting for the Chinese economy, particularly for sectors such as the chemical, automotive and parts of the engineering industries. At an event organised by consulting firm Staufen, he recommended that industry should think through “disruptive scenarios from blip to collapse”. However, business in China still offers German companies significant opportunities, agreed those attending the Staufen management dialogue.
“The Chinese boom is different,” concluded the Director of the Mercator Institute for China Studies (Merics). Massive opportunities for growth still remain, believes Heilmann, in selected industries such as robotics, control technology, environmental or medical technology. “In many other sectors, the Chinese government believes that foreign expertise, technology and investments are no longer necessary, and as such there is a rising trend in discrimination and driving out foreign companies.”
Heilmann warned the German industry of the so-called turkey trap: “After many weeks of feeding, a turkey might feel surer than ever that the farmer wants the best for him. That is, until he ends up on a plate.” This is what can happen to German companies in China who are used to success if they do not take care.” It is therefore important to question assumed continuity, think through new scenarios, and above all to not give credit to any official calming formulae. The “new normality” in Chinese business is not stable, but very volatile.”
China’s economy is changing, agreed the German and Chinese participants at Staufen’s event with the head of Merics. The trend away from quantitative towards qualitative growth, at the same time offers German companies new chances. “The opportunities far outweigh the risks. But we must adapt to the new challenges, and must think about new products and services,” said Martin Haas, Founder and Executive Board Chairman of Staufen AG. Everyone agreed: German industry will in future only continue to be successful if it targets its products more precisely at customers.