The Chinese subsidiaries abroad are now supporting European corporations in the corona crisis, particularly in the automotive industry. Here you are on the way to normal level.
By Fabian Kretschmer, Beijing
When the corona virus broke out in China, German companies initially suffered from those with a strong presence in the People’s Republic. In the meantime, the tide has turned: “Many production facilities in Europe are closed while they are back in operation in China,” said Jörg Wuttke, President of the European Chamber of Commerce in Beijing. Therefore, it is currently an advantage for domestic companies if they have a mainstay in the second largest economy in the world.
Especially since the country with 1.4 billion inhabitants is still the most important sales market for many industries. Above all, China is a few weeks ahead of the rest of the world in fighting the virus. Overall, according to official statistics, there are only just under 1200 people who carry the virus. The majority of the over 82,000 infected people have recovered.
President Xi Jinping is now focusing on the gradual opening of the economy, which is currently being tentatively tried. It is a balancing act between the health of the population and economic performance that the Communist Party has so far been conservative. The fear of a new outbreak of the virus is deep in the heads of cadres, not least because a second wave in a country with 1.4 billion people and a poorly developed health system by European standards could have devastating consequences.
However, the central government does not want to see this area of conflict as a contradiction: the consequential costs of mass unemployment and bankrupt companies could be as threatening as the virus pandemic. After a historic slump in January and February, in which many economic data fell by over 20 percent, the economy is growing slightly again.
This is also noticeable among German companies in the country, especially the car manufacturers, who are all heavily dependent on the Chinese market. After a few catastrophic months, a strong »rebound« effect can now be observed – leftover orders have to be processed in addition to the new ones. Daimler CFO Harald Wilhelm recently said that the Chinese market is ensuring that the company could make a profit in the first quarter of the year despite the miserable situation in Europe. China has almost returned to normal levels since March. Stephan Wöllenstein, Head of China at Volkswagen, told the Wall Street Journal that production would be brought back to 100 percent by June.
If you listen to European companies in China, you can also see timid optimism: the factories of almost all companies have long been open again, the employees at work. But many foreign companies in China are now suffering from the slump in demand on the world market.
“When you leave the house, you get the feeling that Shanghai is already back to normal: shopping malls are open, the streets are full,” says Carlo D’Andrea, who heads the European Chamber of Commerce in Shanghai: “Our main problem at the moment is, however, that many European employees, including key decision-makers, do not come to the country. Of course, that also influences the performance of the companies. «
In fact, China has closed its doors to foreign nationals indefinitely. At the moment, no one comes into the country except for diplomats and some business delegations. In addition, increasing discrimination against foreigners is noticeable in China, who are now considered potential virus carriers.