45th anniversary of German-Chinese relationship

“Our success story continues after 24 years”

Since the Federal Republic of Germany and China established their diplomatic relationship in 1972, many German companies invested in China. KION Group set its foot in 1993 by establishing a joint venture Linde Xiamen and since then has been benefiting from China’s fast-growing economy. A success story.

2017-10-09

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Some call him the “Father of Linde Xiamen.” The man talking about is Andreas Fäth, and spread before him are documents and photographs that seem to have yellowed slightly. He very cautiously pulls out one photo from among the lot and says, “Look! This is our Sino-German project preparation team at the ground-breaking ceremony for the Linde Xiamen plant in 1993. This is me, thirty-nine years old.” His eyes light up as he starts to introduce the eight core team members in the picture: Four Germans representing Linde and four Chinese representing the Xiamen forklift firm. That makes eight – a Chinese lucky number.

When the photograph was taken, many other Sino-German joint ventures were also setting foot in the country. This was hard to imagine when the Federal Republic of Germany and the People’s Republic of China established their diplomatic relationship in 1972. But it laid the foundation for successful projects like Linde Xiamen.


Fäth experienced the progress very closely. “Xiamen still didn’t have any tall buildings at the time, there were only few cars on the streets, and Linde Xiamen was still just a green field. There was nothing anywhere around it, more or less just like countryside.” , he recalled. But through the Sino-German team’s cooperation, there arose on that open ground in 1996 an office building over 10 stories high and a forklift plant, built on the 1:1 German standard, along with supporting facilities. The new factory was formally commissioned the same year. From that point on, the company has been the largest foreign-funded supplier in China’s industrial trucks market and the leader of the high-end market. In 1999, the company became a wholly German-owned enterprise, and in 2005 it changed its name to Linde (China) Forklift Truck Corp., Ltd.


It is actually easy to understand why Andreas Fäth likes to recall the time in China. After all, today Xiamen is one of the most developed cities in the economy of China’s coastal region, with a permanent population of nearly four million, skyscrapers and intricately woven flows of traffic. The scene that met the eye twenty-four years ago has already vanished without a trace. The company Linde (China) today has grown into the R&D centre and production, sales and service base in Asia Pacific region for KION Group.


The Linde Xiamen plant construction project agreement was signed in 1993 between then-German Chancellor Helmut Kohl and then-Premier Li Peng of the People’s Republic of China at the Great Hall of the People in Beijing. This coincided with the German government’s release of its “Asia Concept” in which German enterprises were encouraged to invest in Asia, and in China especially. China, for its part, was accelerating the pace of reform and opening following Deng Xioaping’s famous Southern Tour speeches in 1992, adding to its attractiveness to foreign investment. Some German corporations seized the opportunity this presented to enter the China market. After over two decades of development, those “early birds” like KION Group have established firm footholds in the Chinese market.

In the view of Chingpong Quek, Member of the Executive Board and Chief Asia Pacific Officer of KION Group, the ability of Linde (China) to achieve such eye-catching growth performance in the China market as KION Group’s brand name company there is thanks first and foremost to the healthy development of Sino-German relations: “The governments of both China and German encouraged German enterprises to invest in China, so we had the opportunity twenty-four years ago to enter China, seize the initiative and gain a tremendous competitive advantage. And now our Linde brand enjoys an extremely good reputation in China, with a lead in technology and unparalleled services.”


Fäth is happy about KION Group’s successful track record in China over the last twenty-four years, and he’s also proud to have been able to make his contribution. He wrapped up his work in China and returned to Germany in 1998, but that special work experience in China became one of his most wonderful memories, and to this day he has cherished the deep friendship he made with his Chinese colleagues. Nowadays, as a senior project manager for operations and engineering at KION Group, he is still busy on China-related projects, including one to provide factory operation and product-related support to KION Group’s economy brand, Baoli, in the town of Jingjiang in Jiangsu Province.

Before joining the KION family in 2009, Baoli (Jiangsu) Forklift was originally a small homegrown Chinese maker of forklifts. Afterwards, by relying on the Group’s robust strength, ample resources and advantageous global position, Baoli expanded its business from China to the rest of Asia, as well as Europe and Americas. With distributors in over 80 countries, it has now become a global manufacturer of materials handling equipment. In the Chinese market, KION Group has used its Baoli economy brand to complement the Linde high-end brand perfectly and further increase its market share.


This did not mean, however, that KION Group was going to rest on its laurels. In 2012, with an eye toward solidifying and building on its successful growth in China, KION Group established a strategic partnership with the diesel engine producer Weichai Power and found a long-term anchor investor The cooperation takes place in a lot of areas and the KION Group draws on Weichai Power’s high profile in China to raise its visibility in the local market. The joining of Weichai Power’s forces with those of KION is seen as a successful model of long-term win-win cooperation between German and Chinese industrial enterprises.


All of this fills CP Quek with confidence in KION Group’s prospects in China: “We are very optimistic about the development of the bilateral relationship between Germany and China. Twenty-four years ago, we were very far-sighted to have laid a foundation for success in the Chinese market. Now and in future, we will build on that success story by showing the same spirit and seizing opportunities whenever they arise.”


Three questions for CP Quek

1. What was the environment like for German investment in China when the Linde factory opened in 1993 in Xiamen?

Ever since diplomatic relations were established between China and Germany in 1972, there has been exchange between the two nations in areas such as trade, education, and culture. From 1992 onward, the level of German investment in China accelerated thanks to the improved economic climate resulting from China’s reform and open-door policy and the German government’s Asia strategy, which encouraged German industry to invest in the continent. These investments were mainly large scale and technology driven and included Linde China, with a total investment volume of 1.7 billion yuan (around 200 million USD).

2. As German-owned companies in China, how have Linde (China) and Baoli benefited from the development of relations between the two nations?

The positive way in which Sino-German relations have developed has provided a stable political environment for German companies in China.

Germany has always been very open to the idea of its companies investing in China and has adopted a pragmatic approach. China, meanwhile, has been welcoming foreign investment by putting in place favorable policies for business.

In the course of its rapid development, Linde (China) has been actively supported by its German parent company in the areas of product development, production, and talent management. Linde (China) is the largest foreign supplier of material handling solutions in the Chinese market and is the market leader in the premium segment.

KION’s economy brand Baoli also benefits from its German background, which it uses to differentiate itself from the legions of essentially homogenous economy brands in China. With a great deal of support from its German parent group, Baoli has grown from a small local forklift manufacturer into an international supplier of material handling products whose business is growing in Asia, Europe, and Latin America.

3. China and Germany are facilitating the bilateral sharing of expertise in intelligent manufacturing and have established taskforces to cooperate in this area and in industry 4.0. Do you see any potential for the KION Group to benefit from this cooperation?

In 2015, China launched its ‘Made in China 2025’ strategy, which is an answer to the ‘Industry 4.0’ concept introduced by Germany in 2012. Both plans are strategic decisions that align with the digitalization trend.

Intelligent manufacturing and Industry 4.0 offer tremendous opportunities for businesses to harness potential for efficiency, transparency, and productivity gains throughout the supply chain.

The KION Group is ideally positioned to benefit from the attractive and profitable growth that is being driven by megatrends such as Industry 4.0, digitalization, and e-commerce.


Background


In October 1972, West Germany’s then foreign secretary Walter Scheel traveled to Beijing to sign a communiqué establishing diplomatic relations with the People’s Republic of China. Not long before that, in July 1971, US Secretary of State Henry Kissinger had paid a first secret visit to Beijing, initiating a rapprochement between this largely isolated country and the US. This period marks the beginning of China’s cooperation with the world. In 1975, Helmut Schmidt became the first West German Chancellor to visit China for talks with Mao Zedong and the reformer Deng Xiaoping, who was Mao’s second in command at the time and who ultimately initiated China’s open door policy in 1979. Within the same year, Germany and China signed a treaty on economic cooperation. The Chinese delegates arriving in Germany for the official signing were still clad in Mao-style suits, but change was in the air. Over the following years, major German industrial companies and car manufacturers as well as many medium-sized businesses invested in China, predominantly along the country’s coastline. Economic development became increasingly important to China’s government. The Asia Concept devised by German Chancellor Helmut Kohl in 1993 described Asia, and China in particular, as a region holding enormous potential for German companies. These days, it is common practice for large business delegations to accompany any state visit to China.

Between 1979 and the end of 2015, cumulative investments of around €69.5 billion flowed from Germany to China. In return, the value of Chinese direct investments in Germany has multiplied sixfold since 2004, growing to €2.2 billion. According to figures published by the German Embassy in China, the bilateral trade volume came to nearly €170 billion in 2016. Of this figure, German exports to China accounted for €76 billion, while Germany imported goods from China worth nearly €94 billion – more than from any other country in the world.

The German Embassy describes the current bilateral relations as “friendly and good”. During President Xi Jinping’s state visit to Germany in 2014, the relationship was upgraded to the status of a “comprehensive strategic partnership”. The two countries also collaborate on global issues such as climate change.