China expands trade influence in Germany
June 16, 2019
Duisburg, a city in Germany's most populous state of North Rhine-Westphalia, is strengthening its ties with China. And this is especially evident in the principal's office at Max Planck High School. Here, Chinese language textbooks lie scattered across a conference table, and Chinese plates and a miniature folding screen decorate a low table nearby. There's even a Chinese poem on the wall.
"The trend is clear: We must work together with China," says Principal Gabriele Rüken, pointing out that the city has already developed "close cultural and economic ties."
To that end, she has decided that as of next year, students at her school will be able to start learning Chinese from their seventh year, alongside French and English.
Rüken says the new language option will close a gap in the market and help to "portray a realistic image [of China]. By learning Chinese, students will be able to see things as they are. And Duisburg companies will be especially interested in graduates with knowledge of Chinese."
Read more: EU fears divisions as China woos Eastern European nations
Ties date back decades
The ties between the city and China go back nearly 40 years, to when Duisburg and the inland port city of Wuhan became sister cities in 1982. Johannes Pflug, Duisburg's representative for China affairs, says this laid the foundation for today's close relationship.
These days, Duisburg is more familiar to many Chinese people than Berlin. About 2,000 Chinese students currently study at the local university, and 100 Chinese companies have set up shop in Duisburg. "We are currently in talks with a Chinese investor who wants to buy a piece of real estate near our central train station," says Pflug. "That's exactly what we want."
Indeed, Duisburg is in dire need of investment. The city was once a key German steel and coal producer — much like Wuhan today — but when these industries began winding down, many locals found themselves unemployed. Today, about 11% of Duisburg residents are without a job. By comparison, the average unemployment rate across Germany is just 3%.
Strong economic relationship
Duisburg's port has become a key economic factor in the relationship with China. Over the past 20 years, 7,000 jobs have emerged in this sector, in part thanks to China's "Belt and Road Initiative" (BRI). The BRI scheme, an extensive infrastructure network planned to link Europe and Asia, is one of Beijing's largest economic programs. More than 100 countries are involved, and one of the new trade routes ends here.
Duisburg, which has the world's biggest inland port, is crucial to the BRI. The port boasts eight container terminals where cargo is transshipped for onward transport throughout Europe. Trade with China is growing: Every week, 35 freight trains run between Duisburg and China.
"We serve about a dozen Chinese cities and provinces," says Erich Staake, the head Duisburg's port, who hopes this "will give us an opportunity to grow further." Staake explains that about a third of all trade between Europe and China already goes through Duisburg.
But so far, China benefits far more from the arrangement. Right now, for every three containers of goods sent to Europe via Duisburg, just one container is sent eastwards. China, in other words, remains a major exporter.
Read more: Trump's EU trade dilemma: United against China or alone against the world?
Cultural differences
Thomas Pattloch, a lawyer who advises German companies on how to do business with their Chinese partners, warns that "Germans are extremely naive when negotiating with the Chinese."
Pattloch says "they tend to be underprepared, unlike their counterparts. And they totally underestimate the way the Chinese negotiate, which is unique to their culture and lifestyle."
Duisburg's China representative Pflug is aware of this danger, but stresses that "so far the Chinese have proved themselves to be fair business partners, and we are treated as equals." However, he admits much of China's domestic market remains off limits to European exporters.
Pattloch, too, thinks both sides could establish great business partnerships, adding that despite "cultural particularities, many business negotiations follow an established pattern." He warns, however that German businesses should be cautious about issues such as data security and telecommunications.
Can Huawei be trusted?
Duisburg aims to develop its smart city infrastructure, in part with 5G technology from Huawei. But the Chinese tech giant has in recent weeks been blacklisted by the US, which accuses it of sharing data with China's secret service, and Duisburg has been criticized for its choice.
But Martin Murrack, who heads Duisburg's digitalization department, is eager to strike a moderate tone. "Huawei is just one of several companies we are partnering with for our smart city program," he says. "We have not struck an exclusive deal; we are not obliged to use Huawei's services." Murrack is adamant that nobody's data will be shared with the Chinese tech company, as it is stored on a local server.
In fact, Murrack would much rather leave global politics to Germany's government, saying "it's not our place to comment on international affairs. And if the government decides a company can no longer be trusted, we will of course comply with that."
"Lately, mistrust has grown tremendously between the East and West," says business adviser Pattloch. "We will have to impose more checks when personal data is being processed, because it's clear companies like Huawei cannot refuse demands made by the Chinese state."
And yet, many locals still believe they can trust their Asian business partners. After all, Duisburg's economy can use all the help it can get.