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Recently, many international companies have turned away from China. Premier Li Qiang wants to change that with his appearance at the WEF.
Last fall, the Swiss group Phoenix Mecano opened a new headquarters for its subsidiary about an hour and a half south of the economic metropolis of Shanghai.
This produces drive systems for furniture. These can be used to adjust the backrest of an armchair, adjust the height of a desk or to position a hospital bed.
Big investment in China
With its investment worth the equivalent of 100 million euros, the Swiss company is fully committed to China. Production, research and development, administration: everything is housed at the new headquarters in China. While more and more companies are turning away from China, Phoenix Mecano is investing against this trend.
Legend: The new headquarters of the Phoenix Mecano subsidiary south of Shanghai. SRF/Samuel Emch
“This also happened at the customer’s request,” says boss Rochus Kobler. These had already been produced in China earlier. Now, with the new headquarters near Shanghai, they are helping to shape an entire furniture manufacturing industry cluster.
Here we develop machines in a third of the time and at a tenth of the cost.
Kobler emphasizes that China is no longer the cheap production location it once was. You can now develop machines and drives very efficiently here.
This is also why the relocation from Switzerland and Germany to China occurred, as the boss of Phoenix Mecano explains. “We are developing machines here in a third of the time and at a tenth of the cost of before.”
Tax relief, contacts with universities
The Chinese government is also providing incentives: for example, local authorities would make it easier to buy land. “There are subsidies in the form of tax breaks or you get access to research institutes such as universities,” says Kobler. His company depends on that.
Premier Li Qiang promotes China at the WEF
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Legend: Keystone/Markus Schreiber
In his speech at the WEF in Davos, China’s Prime Minister Li Qiang called for international cooperation. It is important to break down barriers to cooperation. It is important to keep retail chains “stable and supple”. The Chinese economy is making steady progress and will continue to be a driving force for the global economy. Li pointed out that the economy in China continues to grow, with GDP increasing by around 5.2 percent last year.
They remain “determined” to open up the Chinese economy: “The decision to invest in the Chinese market is not a risk, but an opportunity,” added Li. The background to the Beijing appeal was a statement by IMF deputy head Gita Gopinath, who warned in December of a split in the global economy into two blocs.
Chinese President Xi Jinping had warned the European Union not to view his country as a rival and to embark on a course of confrontation. At a summit in Beijing with EU Commission President Ursula von der Leyen and other EU leaders, Xi recently declared his willingness to engage in closer economic cooperation. (reuters)
That sounds good. But China’s authoritarian government is increasingly intervening in the private sector. There are also geopolitical tensions. Many companies and investors are unsettled when they look to China. Accordingly, investments from abroad fell drastically.
Geopolitics excluded in the decision
Investors and analysts also asked critical questions about investments in China, says Kobler. He ignores the current crisis situation in international politics: “Geopolitics or not – it is not relevant to business here locally.”
Legend: Phoenix Mecano develops drive systems for furniture in China. SRF/Samuel Emch
As a citizen, he is racking his brains about how geopolitics could continue. But: “From a business perspective, it is currently not a strategically relevant point.” Investments in China make sense for the Swiss group.
Chinese Prime Minister Li Qiang wants to convince the global business elite of this in Davos at the WEF. His task is difficult: the currently sluggish economy in China, the government’s increasingly authoritarian tendencies and geopolitical tensions still have a deterrent effect on international investors.