Latest news with #Mittelstand
South China Morning Post
2 days ago
- Automotive
- South China Morning Post
Cheerleaders to critics: German machinery makers call for EU action on China
Now, as exports dwindle and facing 'increasingly strong [Chinese] competitors' beefed up by 'unfair state subsidies', the industry is demanding that Brussels put in place trade barriers to protect it. A new position paper published on Thursday by the Mechanical Engineering Industry Association (VDMA), representing medium-sized manufacturers that help constitute Germany's famed Mittelstand group of businesses, marks a dramatic reversal for an industry that until recently lauded the Sino-German economic miracle. 'The EU should impose countervailing duties on imports from third countries if they violate EU anti-dumping or anti-subsidy rules. China is a particular focus here with its aggressive export policy,' read the VDMA's paper. The industry group – whose 3,600 members make everything from power transmission systems and machine tools to semiconductor machines and precision tools – made clear that it was ready to compete with Chinese rivals on a level playing field. However, it was also unequivocal that it feels those conditions do not exist and that it wants governments to intervene. 12:53 'Overtaking on a bend': how China's EV industry charged ahead to dominate the global market 'Overtaking on a bend': how China's EV industry charged ahead to dominate the global market 'Chinese companies are heavily subsidised by the government. And they supply products to Europe that sometimes disregard our technical regulations. China is not playing fair, and politicians must respond to this,' said Bertram Kawlath, VDMA's president.
Reuters
5 days ago
- Business
- Reuters
In Germany, retiring company owners struggle to find successors
BERLIN, June 10 (Reuters) - Rudolf Kiessling would like to retire after years spent building his heating, ventilation, and air conditioning business. But he faces a challenge common to many German company bosses: finding someone to take over. The 62-year-old is among thousands of owners of small and medium-sized enterprises (SMEs) - some 99% of German firms, known collectively as the Mittelstand - who may have to wind up their businesses if they cannot find a successor. The issue is a growing risk to Europe's largest economy, already suffering its longest downturn since World War Two. "I have no one. I have a son, but he can't do it because he has done something completely different professionally," Kiessling told Reuters. "Some employees may have interest, but they are a bit afraid of the responsibility." A survey by state-run development bank KfW showed around 231,000 SME owners planning to close their companies by the end of this year - 67,500 more than a year ago. Age is a major factor: demographic data show more than half of Mittelstand owners are over 55 years old, up from 20% 10 years ago. And they are ageing faster than the population as a whole - 39% of them are 60 or older, compared with 30% of Germans overall. "Never since we began to monitor business successions have so many small and medium-sized enterprises considered giving up their operations," said KfW's Mittelstand expert Michael Schwartz. SMEs account for more than half of Germany's economic output and almost 60% of jobs, and are an engine of private investment. The succession problem "not only threatens jobs but also weakens Germany's economic position overall," Marc S. Tenbieg, head of the DMB Mittelstand association, told Reuters. Although the new government wants to boost investment with an infrastructure fund, corporate tax cuts and advantageous depreciation options, businesses may be reluctant to commit without clarity about their future leadership. Carsten Brzeski, global head of macro at ING, cited studies showing under-investment of 400 to 600 million euros ($457-686 million) in Germany over the last decade. "Investments are held back as business owners cannot find adequate succession planning," Brzeski said. Before February's election, the Commission for Business Succession of another Mittelstand association, BVMW, made recommendations to address the problem, including tax incentives for business transfers and ways to improve financing conditions. "The new government plans very little on this issue according to the coalition agreement, where the term 'business succession' does not appear at all," said Benno Packi, chairman of the commission. A economy ministry spokesperson said the government has been supporting business successions with numerous measures, such as a free website to match owners with potential buyers, and loan offers with reduced interest rates. A smaller pool of internal candidates can make it hard to find talent, especially if larger companies offer more competitive packages, said Oliver Stettes, head of labour economics at the IW economic institute. Germany already has an acute shortage of skilled workers. But the succession squeeze also has an impact on bigger firms, nearly all of which have small companies as suppliers that would be hard to replace. Candidate scarcity can make what is often an emotional transition more challenging, said Holger Wassermann, an expert in company successions. "Psychology makes up at least two-thirds of the considerations in Mittelstand business sales," Wassermann said. "For many entrepreneurs, their company feels like a body part - selling it can feel like losing an arm." The average age of those handing over increased to 63 years from 61.5 years last year, while the age of those taking charge was static at 38 years, according to a Successions Monitor in which Wassermann participates. Marcel Krieb is an outlier. At just 25, he became managing director of pretium associates, a financial consultancy for SMEs established in 2003, after working on a project with its founder. "He asked me at the right time if I could somehow succeed him in his company," Krieb told Reuters. "Many young people prefer the security of a steady paycheck and predictable future, rather than the uncertainty that comes with being self-employed." Many Mittelstand companies are family-owned but nowadays fewer sons and daughters are prepared to take over. A survey by the Ifo Institute found 42% do not have a family member lined up to succeed. Jacob von der Decken was 30 and his father 68 when Jacob took over the family's agricultural business in northern Germany last year, having discussed it periodically since he was 14. "It's a lot of responsibility going on your shoulders," said von der Decken, who studied agricultural economics and had been working on renewable energy projects at a fintech company. "In agriculture, your family lends you the farm for one generation, and then you pass it on to the next generation. You have like 30 years of bringing it forward and making sure that it also lasts the next decades." While his father's generation prioritised efficiency, he is focusing on diversification and leveraging AI for data collection through a startup, Tunen Agronomy. Private equity takeovers, often mooted as a solution, are really only an option for larger Mittelstand firms, said Michael Wolff, an M&A expert at investment bank Stifel who specializes in transactions for companies valued at 100-500 million euros. "For the craftsman with 10 people or 20 workers ... So far there hasn't been a solution that systematically helps these people," Wolff said. And the Mittelstand's problems ripple widely. "With each small piece that breaks away, the foundation of the German economy becomes a bit more fragile," said pretium's Krieb. ($1 = 0.8877 euros)
Yahoo
20-03-2025
- Business
- Yahoo
Crédit Mutuel Alliance Fédérale expands in Germany with the acquisition of OLB, making TARGOBANK a universal bancassurer
Strasbourg and Düsseldorf, March 20, 2025 Crédit Mutuel Alliance Fédérale expands in Germany with the acquisition of OLB, making TARGOBANK a universal bancassurer Crédit Mutuel Alliance Fédérale has reached a major milestone in the development of its banking and insurance model in Europe with the signature of an agreement to acquire 100% of German bank Oldenburgische Landesbank (OLB) via its subsidiary TARGO Deutschland GmbH (TARGOBANK). This transaction, on a scale not seen since the acquisition of Citibank in Germany in 2008 (renamed TARGOBANK), demonstrates the solidity and ambitions of Crédit Mutuel Alliance Fédérale. Already present in Germany, the mutual banking group is strengthening its foothold in Europe's largest economy. This move accelerates TARGOBANK's path to becoming a universal bancassurance player in Germany, following the model of its parent company. The consolidated group will become the tenth largest bank in Germany in terms of assets, with a comprehensive offering in corporate financing serving Mittelstand companies and in retail banking. The estimated impact of the transaction is -115 basis points on Crédit Mutuel Alliance Fédérale's CET1. This transaction is subject to the approval of the regulatory authorities, in particular the European Central Bank (ECB) and the competition authorities. Germany, the mutual banking group's second-largest domestic market Crédit Mutuel Alliance Fédérale aims to become a leading bancassurer in Europe. While it was the fifth largest banking group and tenth largest insurer in France in 2024, the group already generated 20% of its revenues internationally. Germany is the group's second-largest domestic market, where it operates through several of its subsidiaries, in particular TARGOBANK, ACM Deutschland, and CIC. Thanks to its financial solidity, operating performance and technological edge, the group has major advantages to enable it to succeed in this consolidating market. OLB, a leading bank in Germany Founded in Lower Saxony, one of Germany's largest states, where it has a strong foothold, OLB is a universal bank with operations throughout Germany. Thanks to an effective strategy of sustained growth over the past ten years, it serves one million customers. With more than €30 billion in assets, it is one of the leading financial institutions in Germany. OLB is active in two buoyant markets. It offers strong expertise in private banking and wealth management, providing a full range of banking and insurance services to individuals and professionals. It also stands out for its expertise in corporate financing (corporate, commercial real estate) and business acquisitions (LBO and acquisition finance). Togetherness Performance Solidarity: a successfully launched plan in its second year After the first year of the Togetherness, Performance, Solidarity strategic plan which closed with very high 2024 results for Crédit Mutuel Alliance Fédérale, 2025 marks a major turning point for the mutual banking group. TARGOBANK's acquisition of OLB will enable it to significantly amplify its transformation as a universal bancassurer in Germany, complementing the launch of ACM Deutschland's commercial activities in the second half of 2025. In addition to offering rapid growth prospects for its retail mortgage lending business, TARGOBANK will be able to strengthen its position in the SME and mid-cap markets (Mittelstand companies), in wealth management and specialized financing, with the potential for synergies in revenue and cost efficiency for the medium term. With this transaction, TARGOBANK becomes the tenth largest bank in Germany. The consolidated group serves 4.8 million customers with total balance sheet of €79 billion. 'The acquisition of OLB, marks a major milestone for Crédit Mutuel Alliance Fédérale, fully aligned with its strategic plan Togetherness Performance Solidarity. We have the ambition to expand our activities in Europe, and specifically in Germany, largest European economy. With our subsidiaries TARGOBANK, which will integrate OLB, and ACM Deutschland, we are committed to become a bancassurer across the Rhine' said Daniel Baal, Chairman of Crédit Mutuel Alliance Fédérale: 'Our group's history shows that it has the ability to successfully complete external growth transactions, in particular those of CIC, and, more recently, TARGOBANK and Cofidis. This strategic investment reflects our determination to become a leading bancassurer in Europe by integrating the resources and values of OLB into TARGOBANK. We are building for the long run.' added Éric Petitgand, Chief Executive Officer of Crédit Mutuel Alliance Fédérale. 'This acquisition marks a decisive step in Crédit Mutuel Alliance Fédérale's development in Germany. The respective and complementary expertise of TARGOBANK and OLB's employees will enable us to significantly speed up our transformation as a universal bancassurer in the strategic German market. There is significant business and customer growth potential among individuals, professionals and businesses,' adds Isabelle Chevelard, Chairwoman of the Executive Board of TARGOBANK and Head of the German market for Crédit Mutuel Alliance Fédérale. Stefan Barth, CEO of OLB, welcomes the transaction: 'Over the past few years, OLB has pursued a dynamic growth strategy with remarkable results. We are proud to join Crédit Mutuel Alliance Fédérale, with which we share common values, to build together a stronger banking group.' Acquisition by Crédit Mutuel Alliance Fédérale,via TARGO Deutschland GmbH,of Oldenburgische Landesbank AG (OLB) The Crédit Mutuel Alliance Fédérale and TARGOBANK teams, in accordance with the applicable competition laws, will work closely with the OLB teams to facilitate completion of the transaction in the interest of customers, members, elected representatives and employees. This project is subject to the usual conditions precedent and in particular the approval of the competent regulatory and competition authorities. The transaction is expected to be completed in the first half of 2026. About OLB OLB is a universal bank that operates nationwide in Germany, and has over 150 years of experience in Lower Saxony. Under the OLB and Bankhaus Neelmeyer brands, the bank advises more than a million customers, in the retail, business, corporate and diversified lending segments. OLB has a network of 80 branches and nearly 1,700 employees. Thanks to a solid acquisition strategy over the last ten years (private banking operator Bankhaus Neelmeyer in 2017; Bremer Kreditbank, formerly KBC Bank Deutschland, in 2018; Wüstenrot Bank AG Pfandbriefbank in 2019 and more recently Degussa Bank in 2024), OLB has diversified its activities (retail banking, corporate banking serving Mittelstand companies, private banking, project finance, Pfandbrief refinancing, etc.) to become a universal bank. At December 31, 2024, OLB had net banking income of nearly €750 million, a cost/income ratio of less than 43%, and net income after tax of €270 million. OLB also saw its balance sheet assets surpass the €30 billion threshold, enabling it to become, in early 2025, a major financial institution supervised as such by the European Central Bank. Press contactsCrédit Mutuel Alliance Fédérale: Aziz Ridouan - +33 (0)6 01 10 31 69 - Corporate Communication Department: +33 (0)3 88 14 84 00 - com-alliancefederale@ pressestelle@ presse@ About Crédit Mutuel Alliance Fédérale One of France's leading bancassurers with 77,000 employees serving 31 million customers, Crédit Mutuel Alliance Fédérale has 4,200 branches which offer a diversified range of services to private individuals, local professionals and companies of all sizes. As the first French banking group to adopt the status of a mission-driven company, Crédit Mutuel Alliance Fédérale is made up of the following Crédit Mutuel federations: Centre Est Europe (Strasbourg), Sud-Est (Lyon), Ile-de-France (Paris), Savoie-Mont Blanc (Annecy), Midi-Atlantique (Toulouse), Loire-Atlantique et Centre-Ouest (Nantes), Centre (Orléans), Normandie (Caen), Dauphiné-Vivarais (Valence), Méditerranéen (Marseille), Anjou (Angers), Massif Central (Clermont-Ferrand), Antilles-Guyane (Fort-de-France) and Nord Europe (Lille). Crédit Mutuel Alliance Fédérale also includes Caisse Fédérale de Crédit Mutuel, Banque Fédérative du Crédit Mutuel (BFCM) and all its subsidiaries, in particular CIC, Euro-Information, Assurances du Crédit Mutuel (ACM), TARGOBANK, Cofidis, Beobank in Belgium, Banque Européenne du Crédit Mutuel (BECM), Banque Transatlantique, Banque de Luxembourg and Homiris. Find out more at About TARGOBANK TARGOBANK has almost 100 years of experience in the German banking market. It serves 3.8 million private, business and corporate customers. TARGOBANK offers simple and attractive banking products with high quality service so as to build a long term relationship with its customers. With a network of 340 branches spread in more than 250 cities in Germany aswell as a service accessible online and by telephone around the clock, TARGOBANK combines the benefits of a digital bank as well as local support whether in the local branch or at the customer's home. TARGOBANK is headquartered in Düsseldorf. It employs 7,400 people throughout Germany, including 2,000 working for its customer center in Germany. There are also administrative buildings in Mainz (Factoring), Düsseldorf (Leasing & Investment Finance) and Frankfurt (Corporate & Institutional Banking). As a subsidiary of Crédit Mutuel Alliance Fédérale, one of the strongest banks in Europe, TARGOBANK is a reliable partner for its customers. Further information: Strasbourg and Düsseldorf, March 20, 2025 Crédit Mutuel Alliance Fédérale expands in Germany with the acquisition of OLB, making TARGOBANK a universal bancassurer Crédit Mutuel Alliance Fédérale has reached a major milestone in the development of its banking and insurance model in Europe with the signature of an agreement to acquire 100% of German bank Oldenburgische Landesbank (OLB) via its subsidiary TARGO Deutschland GmbH (TARGOBANK). This transaction, on a scale not seen since the acquisition of Citibank in Germany in 2008 (renamed TARGOBANK), demonstrates the solidity and ambitions of Crédit Mutuel Alliance Fédérale. Already present in Germany, the mutual banking group is strengthening its foothold in Europe's largest economy. This move accelerates TARGOBANK's path to becoming a universal bancassurance player in Germany, following the model of its parent company. The consolidated group will become the tenth largest bank in Germany in terms of assets, with a comprehensive offering in corporate financing serving Mittelstand companies and in retail banking. The estimated impact of the transaction is -115 basis points on Crédit Mutuel Alliance Fédérale's CET1. This transaction is subject to the approval of the regulatory authorities, in particular the European Central Bank (ECB) and the competition authorities. Germany, the mutual banking group's second-largest domestic market Crédit Mutuel Alliance Fédérale aims to become a leading bancassurer in Europe. While it was the fifth largest banking group and tenth largest insurer in France in 2024, the group already generated 20% of its revenues internationally. Germany is the group's second-largest domestic market, where it operates through several of its subsidiaries, in particular TARGOBANK, ACM Deutschland, and CIC. Thanks to its financial solidity, operating performance and technological edge, the group has major advantages to enable it to succeed in this consolidating market. OLB, a leading bank in Germany Founded in Lower Saxony, one of Germany's largest states, where it has a strong foothold, OLB is a universal bank with operations throughout Germany. Thanks to an effective strategy of sustained growth over the past ten years, it serves one million customers. With more than €30 billion in assets, it is one of the leading financial institutions in Germany. OLB is active in two buoyant markets. It offers strong expertise in private banking and wealth management, providing a full range of banking and insurance services to individuals and professionals. It also stands out for its expertise in corporate financing (corporate, commercial real estate) and business acquisitions (LBO and acquisition finance). Togetherness Performance Solidarity: a successfully launched plan in its second year After the first year of the Togetherness, Performance, Solidarity strategic plan which closed with very high 2024 results for Crédit Mutuel Alliance Fédérale, 2025 marks a major turning point for the mutual banking group. TARGOBANK's acquisition of OLB will enable it to significantly amplify its transformation as a universal bancassurer in Germany, complementing the launch of ACM Deutschland's commercial activities in the second half of 2025. In addition to offering rapid growth prospects for its retail mortgage lending business, TARGOBANK will be able to strengthen its position in the SME and mid-cap markets (Mittelstand companies), in wealth management and specialized financing, with the potential for synergies in revenue and cost efficiency for the medium term. With this transaction, TARGOBANK becomes the tenth largest bank in Germany. The consolidated group serves 4.8 million customers with total balance sheet of €79 billion. 'The acquisition of OLB, marks a major milestone for Crédit Mutuel Alliance Fédérale, fully aligned with its strategic plan Togetherness Performance Solidarity. We have the ambition to expand our activities in Europe, and specifically in Germany, largest European economy. With our subsidiaries TARGOBANK, which will integrate OLB, and ACM Deutschland, we are committed to become a bancassurer across the Rhine' said Daniel Baal, Chairman of Crédit Mutuel Alliance Fédérale: 'Our group's history shows that it has the ability to successfully complete external growth transactions, in particular those of CIC, and, more recently, TARGOBANK and Cofidis. This strategic investment reflects our determination to become a leading bancassurer in Europe by integrating the resources and values of OLB into TARGOBANK. We are building for the long run.' added Éric Petitgand, Chief Executive Officer of Crédit Mutuel Alliance Fédérale. 'This acquisition marks a decisive step in Crédit Mutuel Alliance Fédérale's development in Germany. The respective and complementary expertise of TARGOBANK and OLB's employees will enable us to significantly speed up our transformation as a universal bancassurer in the strategic German market. There is significant business and customer growth potential among individuals, professionals and businesses,' adds Isabelle Chevelard, Chairwoman of the Executive Board of TARGOBANK and Head of the German market for Crédit Mutuel Alliance Fédérale. Stefan Barth, CEO of OLB, welcomes the transaction: 'Over the past few years, OLB has pursued a dynamic growth strategy with remarkable results. We are proud to join Crédit Mutuel Alliance Fédérale, with which we share common values, to build together a stronger banking group.' Acquisition by Crédit Mutuel Alliance Fédérale,via TARGO Deutschland GmbH,of Oldenburgische Landesbank AG (OLB) The Crédit Mutuel Alliance Fédérale and TARGOBANK teams, in accordance with the applicable competition laws, will work closely with the OLB teams to facilitate completion of the transaction in the interest of customers, members, elected representatives and employees. This project is subject to the usual conditions precedent and in particular the approval of the competent regulatory and competition authorities. The transaction is expected to be completed in the first half of 2026. About OLB OLB is a universal bank that operates nationwide in Germany, and has over 150 years of experience in Lower Saxony. Under the OLB and Bankhaus Neelmeyer brands, the bank advises more than a million customers, in the retail, business, corporate and diversified lending segments. OLB has a network of 80 branches and nearly 1,700 employees. Thanks to a solid acquisition strategy over the last ten years (private banking operator Bankhaus Neelmeyer in 2017; Bremer Kreditbank, formerly KBC Bank Deutschland, in 2018; Wüstenrot Bank AG Pfandbriefbank in 2019 and more recently Degussa Bank in 2024), OLB has diversified its activities (retail banking, corporate banking serving Mittelstand companies, private banking, project finance, Pfandbrief refinancing, etc.) to become a universal bank. At December 31, 2024, OLB had net banking income of nearly €750 million, a cost/income ratio of less than 43%, and net income after tax of €270 million. OLB also saw its balance sheet assets surpass the €30 billion threshold, enabling it to become, in early 2025, a major financial institution supervised as such by the European Central Bank. Press contactsCrédit Mutuel Alliance Fédérale: Aziz Ridouan - +33 (0)6 01 10 31 69 - Corporate Communication Department: +33 (0)3 88 14 84 00 - com-alliancefederale@ pressestelle@ presse@ About Crédit Mutuel Alliance Fédérale One of France's leading bancassurers with 77,000 employees serving 31 million customers, Crédit Mutuel Alliance Fédérale has 4,200 branches which offer a diversified range of services to private individuals, local professionals and companies of all sizes. As the first French banking group to adopt the status of a mission-driven company, Crédit Mutuel Alliance Fédérale is made up of the following Crédit Mutuel federations: Centre Est Europe (Strasbourg), Sud-Est (Lyon), Ile-de-France (Paris), Savoie-Mont Blanc (Annecy), Midi-Atlantique (Toulouse), Loire-Atlantique et Centre-Ouest (Nantes), Centre (Orléans), Normandie (Caen), Dauphiné-Vivarais (Valence), Méditerranéen (Marseille), Anjou (Angers), Massif Central (Clermont-Ferrand), Antilles-Guyane (Fort-de-France) and Nord Europe (Lille). Crédit Mutuel Alliance Fédérale also includes Caisse Fédérale de Crédit Mutuel, Banque Fédérative du Crédit Mutuel (BFCM) and all its subsidiaries, in particular CIC, Euro-Information, Assurances du Crédit Mutuel (ACM), TARGOBANK, Cofidis, Beobank in Belgium, Banque Européenne du Crédit Mutuel (BECM), Banque Transatlantique, Banque de Luxembourg and Homiris. Find out more at About TARGOBANK TARGOBANK has almost 100 years of experience in the German banking market. It serves 3.8 million private, business and corporate customers. TARGOBANK offers simple and attractive banking products with high quality service so as to build a long term relationship with its customers. With a network of 340 branches spread in more than 250 cities in Germany aswell as a service accessible online and by telephone around the clock, TARGOBANK combines the benefits of a digital bank as well as local support whether in the local branch or at the customer's home. TARGOBANK is headquartered in Düsseldorf. It employs 7,400 people throughout Germany, including 2,000 working for its customer center in Germany. There are also administrative buildings in Mainz (Factoring), Düsseldorf (Leasing & Investment Finance) and Frankfurt (Corporate & Institutional Banking). As a subsidiary of Crédit Mutuel Alliance Fédérale, one of the strongest banks in Europe, TARGOBANK is a reliable partner for its customers. Further information: Attachments Crédit Mutuel Alliance Fédérale expands in Germany with the acquisition of OLB, making TARGOBANK a universal bancassurer Crédit Mutuel Alliance Fédérale expands in Germany with the acquisition of OLB, making TARGOBANK a universal bancassurerSign in to access your portfolio
Yahoo
22-02-2025
- Business
- Yahoo
Why a post-election shift in Germany's China policy is no longer a sure bet
When Ulrich Ackermann started working for the German machinery industry in 1986, the country's watchmaking sector had been eaten up by Japanese competition. Advanced equipment makers were sure they were next. "The watch industry almost completely disappeared from Germany, and there was a fear that this could also happen to the machinery industry. That hasn't happened but now we have a new situation - China Shock 2.0. "I think China is a different story. You can't compare China to Japan," said Ackermann, who will retire from the Machinery and Equipment Manufacturers Association in April. Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team. Over the past few years, the association - which represents 3,600 of Germany's famed small and medium-sized German engineering companies, also known as the Mittelstand - has been raising the alarm about Chinese competitors, which are outstripping German companies in China, Europe and third markets around the world. "We have many complaints from member companies about unfair competition on the European markets. Unfair competition means, on the one hand, subsidisation and prices which are much below our possibilities. "Many members say for [that] the price the Chinese sell here on the European market, they cannot buy the materials to produce the machine," Ackermann, the VDMA's head of foreign trade, told the Post. "On the other hand, unfair competition also means that Chinese companies sell machines in Europe that do not comply with our regulations and are therefore cheaper." Those complaints have largely fallen on deaf ears in Berlin, with the China policy of Chancellor Olaf Scholz prioritising the interests of the biggest companies, which continue to make significant amounts of money in the world's second economy, Ackermann said. Policy-wise, Scholz's government voted against European Union tariffs on Chinese electric vehicles, overruled his cabinet in selling a stake in a Hamburg Port terminal to Chinese conglomerate Cosco and ignored pleas by Brussels to remove telecoms giant Huawei Technologies from the German 5G network. "We had a problem with the last government, they listened, but drew no conclusions. So we hope that the new government will concentrate more on the real developments and have a closer look at what is really happening with and around China," Ackermann said. Scholz's likely successor following Sunday's election, Friedrich Merz, head of the conservative CDU/CSU alliance, is expected to take a tougher stance on China. On the campaign trail, Merz has warned businesses of the "great risk" that comes with investing in China and grouped Beijing in an "axis of autocracies" with Russia, North Korea and Iran. "Political coldness and economic warmth" is obviously the core of the [Christian Democrats'] China policy. So, if Merz becomes chancellor as expected, the current China strategy of the 'traffic light' [coalition] government will be buried without suspense, I believe," said Gu Xuewu, director of the Centre for Global Studies at the University of Bonn. In recent weeks, however, there are growing questions about whether there will be a shift towards a more hawkish stance. Although the return of Donald Trump as US President was always expected to wreak havoc in Europe, many have been surprised by the speed and depth of the collapse in transatlantic ties. Various tariffs will hit European goods in the coming weeks, from steel to cars, with Germany positioned to suffer. Trump has blamed Ukraine for starting the war with Russia, even though Vladimir Putin invaded, and has dismissed European claims for a seat at the negotiating table. In Germany and around Europe, the ultimate fear is that Trump will remove the US security guarantee, leaving it vulnerable to military attack and forcing enormous amounts of money to be funnelled towards defence budgets at the expense of everything else. China "will miss" Olaf Scholz if he loses. Photo: EPA-EFE alt=China "will miss" Olaf Scholz if he loses. Photo: EPA-EFE> "The country's old model of 'cheap energy from Russia, trade orders from China, security from the US' no longer works," wrote analysts from the European Council on Foreign Relations in a recent paper. Amid such pressures, the discussion about de-risking ties with China has slipped down the agenda in Berlin, Brussels and across Europe. "Nobody is talking about China any more," said one diplomatic source, who added that Europe has noticed a "charm offensive" from China, as it attempts to capitalise on the growing friction between the EU and US. The new geopolitical reality is "pitting different parts of the CDU universe against each other", said Jeremy Cliffe, a senior policy fellow at the European council. In this internal battle, Atlanticists such as Merz - who favour "more China hawkishness and [are in tune with the idea of] systems competition" - will be faced with the "Germany First" faction that says that "we've already made life difficult for our for our companies, because of energy policy and now, and it is in the interest of these companies for us to keep good relations with China", Cliffe said. Another restraining factor could be the nature of the coalition Merz is likely to be leading. Final polling by YouGov released on Friday suggested a coalition between the CDU/CSU alliance and the Green party, which observers said would represent the most China-hawkish outcome, would not have enough seats. A grand coalition with the conservatives and Scholz's Social Democrats is seen as more likely, and would represent continuity and a government that China would probably be content to deal with. "Beijing would be very happy to see the Greens be ousted out of the government," said Gu at the University of Bonn. "They are pragmatic people, even though Merz is not the best man for Beijing, they seem to prefer him as chancellor than anyone from the Greens. They would miss Scholz who still enjoys a high reputation in China for his pragmatism." In more than a decade as chancellor, Angela Merkel pursued close ties with China at a time when the two economies showed more complementarity than rivalry. Scholz, meanwhile, frequently overruled his coalition partners and ministries on issues of critical importance to ensure a less confrontational stance towards Beijing. Merz's CDU is split over its approach to China. Photo: dpa alt=Merz's CDU is split over its approach to China. Photo: dpa> Broader events, however, suggest that Merz is likely to have more pressing priorities should he come to power. "Merz has demonstrated that he is willing to criticise China publicly in a way that Scholz never did. So we can expect a more hawkish tone at the top of the German government. But when it comes to the substance of policy, it would be wrong to expect profound change," said Noah Barkin, an analyst of Sino-German relations at the Rhodium Group. "The Trump administration, with its tariffs, cosiness toward Russia and assault on European liberal democracy is going to suck up a lot of Berlin's bandwidth. The question is how much will be left over for China." This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2025 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2025. South China Morning Post Publishers Ltd. All rights reserved.
South China Morning Post
22-02-2025
- Business
- South China Morning Post
Why a post-election shift in Germany's China policy is no longer a sure bet
When Ulrich Ackermann started working for the German machinery industry in 1986, the country's watchmaking sector had been eaten up by Japanese competition. Advanced equipment makers were sure they were next. 'The watch industry almost completely disappeared from Germany, and there was a fear that this could also happen to the machinery industry. That hasn't happened but now we have a new situation – China Shock 2.0. 'I think China is a different story. You can't compare China to Japan,' said Ackermann, who will retire from the Machinery and Equipment Manufacturers Association in April. Over the past few years, the association – which represents 3,600 of Germany's famed small and medium-sized German engineering companies, also known as the Mittelstand – has been raising the alarm about Chinese competitors, which are outstripping German companies in China, Europe and third markets around the world. 'We have many complaints from member companies about unfair competition on the European markets. Unfair competition means, on the one hand, subsidisation and prices which are much below our possibilities. 'Many members say for [that] the price the Chinese sell here on the European market, they cannot buy the materials to produce the machine,' Ackermann, the VDMA's head of foreign trade, told the Post.
