Siemens backs China's signature policies

Siemens gave a full-throated endorsement of two of Beijing's signature initiatives by opening its first BRI international summit there.
Siemens gave a full-throated endorsement of two of Beijing's signature initiatives by opening its first BRI international summit there. PHOTO: REUTERS

At least one major European firm is backing China's ambitious push to become an advanced manufacturing economy by 2025 while reshaping the world order through its Belt and Road Initiative (BRI).

Siemens yesterday gave a full-throated endorsement of two of Beijing's signature initiatives by opening its first BRI international summit here, gathering over 1,000 business executives and government officials from 30 countries.

At the two-day event, the German conglomerate unveiled plans to be a key player in the retooling of Chinese firms, which are trying to move up the global value chain as required under the controversial Made in China 2025 strategy.

"China has always seen the future from the long-term view. The BRI can change the world, and it can change the world trade order - people and tweeters should realise this," said Siemens CEO Joe Kaeser.

China wants to compete in high value-add manufacturing sectors such as aviation and pharmaceuticals, but its plan to do so through government subsidies and state investment in research and development has drawn flak from the West.

The US has said it will announce stiff tariffs next week on goods from China, including those related to Made in China 2025.

Technology such as digitisation and creating virtual simulations can help Chinese firms go into more advanced manufacturing while improving quality and cutting turnaround times, Siemens Managing Board member overseeing Asia and Australia Cedrik Neike said.

Such expertise has proven useful in various sectors. It has been used to automate cleaning and feeding at a Thai fish farm so as to increase yield, and to reduce harmful emissions at a gas plant in South Korea, said Mr Neike.

"And in Finland, we're simulating the country's future for the next 25 years with a digital model, and based on that, investments are being made on how can we push more and more decarbonisation."

Earlier this week, Siemens launched its most advanced Digital Experience Centre, which showcases these technologies, in Beijing. This followed its decision last September to open its world headquarters for robotics and digital technologies research in Suzhou.

"We believe that China has always been and will be the global powerhouse for manufacturing, and manufacturing will be the biggest beneficiary of automation," said Mr Kaeser, who noted that Siemens' longtime investments in software technology have been rewarded with "very rich margins".

However, despite his optimism about China's policies, Mr Kaeser echoed European criticism that the BRI still favours Chinese firms over foreign ones.

Trade issues like reciprocal market access and intellectual property protections were high on German Chancellor Angela Merkel's agenda when she visited China last month.

"While we like to participate in most of these opportunities, we need to be treated as equal partners under the customs of a market economy," said Mr Kaeser.

Still, he said, Siemens' 145-year history in China and its vast overseas operations put it in good stead to succeed here. "No matter which of the 90 BRI countries you look at, Siemens has been in those countries for at least 50 years - most of them a hundred - and that means we (are well-placed to) bring along our partners from China who are now starting to go global."

A version of this article appeared in the print edition of The Straits Times on June 07, 2018, with the headline 'Siemens backs China's signature policies'. Print Edition | Subscribe