Doing business in China

German companies are insisting on better market access to China. "Our greatest concern is unfair conditions for competition," Ulrich Grillo, the head of the Federation of German Industries (BDI), said in an interview with the German news agency dpa on Monday while on a trip to Beijing. Grillo was in the Chinese capital to attend the opening of a BDI office there.

"We want the same conditions in China that we also offer Chinese investors in Germany," Grillo said. "But we're a ways away from achieving that." Among other things, he complained of pressure to form joint ventures with Chinese companies and the forced transfer of technology to China. "In Germany, we have an open market economy - the reverse must also be true," he added.

Criticism aganist new cyber security laws

Grillo also criticized planned new cyber security laws in China, which are blocking new cooperations with German companies in the area of the so-called "Industry 4.0," which involves digitally connected modes of production. "We have the impression that these laws are also aimed at market foreclosure," Grillo said, adding that companies required data security to do business confidently. "But we are not only confronted with slow internet in China, but also demands from the government for technology transfers or the release of source codes." Grillo said such practices were not in the "common interest" of the two countries, since they had nothing to do with security.

Every company has its secrets - whether it's Chinese or German, Grillo said, adding that German industrialists must not be forced to reveal their know-how. "If we build factories in China, and then all the technology and programs are being ripped off - that's not a partnership," he said, emphasizing that the protection of intellectual property rights was very important for Germany. "And we are really missing this in China."

Combating overcapacity

When China and other leading industrialized nations met in Hangzhou last week for the G20 summit, they articulated their desire to combat overcapacity in a final communiqué. Now Grillo is urging those countries to follow through with their pledge. Amid disagreement over the practice of Chinese companies to sell cheap steel in Europe for below-market prices, the BDI president said there must be "potent instruments" against price dumping.

The European Commission must decide whether China is to be classified as a market economy by the end of the year. China was presented with that prospect when it became a member of the World Trade Organization (WTO) in 2001. WTO membership comes with privileges, such as the abolishment of certain trade barriers. But the Commission is now thinking of imposing other instruments. "Regardless, it's important that we have and can implement sensible and effective anti-dumping measures," Grillo said. In the future, there will continue to be areas in which Chinese companies are at overcapacity. "This will continue to be an issue where we'll have to find balanced solutions," Grillo added.

Warning against trade conflicts

No one wants a "trade conflict," Grillo said. He's confident that a solution will be found. "It's important for the Chinese to save face while doing so." The partnership between Germany and China is very important to both sides, he added: "The Chinese need us Germans, but we need the Chinese too." There must be intelligent compromises that are in the interest of both sides. After Brussels, Washington, London and Tokyo, Beijing is the fifth city outside Germany where the BDI has opened an office.