Thumann: Careful about bashing China

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The EU should not be afraid of China’s growing competitive power. Rather, it should strive to have open markets and work towards starting negotiations for an investment treaty to provide better legal protections for European companies in the Chinese market, said BusinessEurope President Jürgen Thumann tells EurActiv.

Jürgen R. Thumann is president of BusinessEurope and co-chair of the Transatlantic Business Dialogue (TABD), the official dialogue between American and European business leaders and the US government and EU. Thumann is a born entrepreneur. At the age of 19, he took over the management of his family's business. Later he founded Heitkamp & Thumann Group which today comprises 21 companies with some 2000 employees.

He spoke to EurActiv's editor-in-chief Daniela Vincenti, on the margins of the 8th EU-China Business Summit in Brussels yesterday (20 September) 

The EU’s bilateral trade deficit with China is significant. Chinese companies are increasingly investing in Europe, and they are entering the EU market with subsidies. You, as a successful entrepreneur, who has worked with and in China for many decades, are you afraid of China?

The best answer I can give you for this question is the following: We Europeans need open markets. We need to tear down all borders and do away with non-tariff barriers. Then, we have to accept also to open our borders.

We Europeans are by far the biggest investor in China and the Chinese find in Europe by far the largest market for them.

Over the last 10 years, China has more than tripled its global export market share from about 5% up to 16%. More than three times than 10 years ago.  In absolute terms they have gone from €200 billion in 2001 to €1.2 trillion last year, of which €300 billion are coming to Europe. We are by far the biggest investor in China so we need to welcome Chinese companies to invest in Europe.

More than 50% of the Chinese exports are coming from our European subsidiaries in China. We have to be careful about bashing Chinese exports to Europe — over 50% come from our own companies.

I can understand that quite a number of entrepreneurs and top executives are getting concerned that China is investing more and more in Europe, but I believe we should welcome them not only because of courtesy, but also because we get their direct competition.

But there are conditions: that we have a fair competition and level playing field. This is where we have reasons to be concerned: whether it for subsidies to Chinese companies. Here I take the example of the solar panel dispute. It is not a fair competition when the Chinese government pays subsidies to Chinese exporting companies. But let’s not forget that they have also started to invest in Europe in the solar sector and have bought in Germany some solar manufacturers. That means they are willing to make a commitment and provide jobs here in Europe.

We should accept that they are trying to become a good employer in Europe.

Can China and the EU manage to overcome their disputes over intellectual property rights in order to facilitate a balanced, two-way sharing of knowledge, technologies and best practices?

Maybe you are talking to the wrong person here. I have chaired for many years the German BDI [the Federation of Germany Industries] and have travelled with Chancellors Schröder and Merkel to China and my experience is that they listened to our complaints. The first result was that in 2006 we agreed that the Chinese would open 50 agencies throughout the country, which would settle issues on intellectual properties or technology transfer, another big issue.

I have to say this is working. I don’t say all problems are solved but not as much as before. More and more over the last 10 years, Chinese companies started to complain about copying processes so that helps. We are as foreigners benefiting from the fact that the Chinese companies are complaining and they have the full attention of authorities.

We have to keep IPR [intellectual property rights] high on the agenda but this is also true for Europe. Don’t think we don’t have an IPR issue within Europe, we do. That’s to be fair.

Do you think the EU has the right strategy to engage constructively with China? What kind of partnership? Will we ever see an FTA?

I think the EU understand that we need a better understanding of the industrial policies of global competitors so that we European companies are treated in a fair way and not discriminated against locally. Tackling market access barriers is essential.

That is why EU diplomats should understand the economic dimension of their diplomatic responsibilities and devote much resources to facilitate economic partnerships with major trading partners and the EEAS should have an economic divisions, similar to the US Department of State.

Towards China, we need to start negotiating an investment treaty. We need better legal protection based on international rules and regulations for our investment in China. This is the Number One priority.

Quite often, large corporations have been forces to deliver their technology. There I say we have to be careful. Therefore, an investment treaty would be very good for us.

Now, for the idea to start negotiations for a free trade agreement would be too much, too soon. Let’s start to do it in steps. For us Europeans, the most important thing is the protection of our investment - a solid legal ground.

What’s your take on the Trans-Pacific Partnership being negotiated by the US and Canada with Asian partners, de facto isolating China? What impact on the EU?

My perception is that the Americans have missed in the past to establish good, solid economic relations with a lot of Pacific countries, because they focused a lot on China. The Europeans, instead, are way ahead than the Americans in the Asian-Pacific countries and we have established relations with these countries.

I believe President Barack Obama wanted to give a momentum so therefore they came up with this marketing and communication story to get it going - to show that ‘We Americans’ are becoming big in Asian-Pacific countries, not only in China .

I would not overestimate this TPP. 

You are also co-chair of the Trans-Atlantic Business Dialogue (TABD). Do you think the EU and the US will launch negotiations for a comprehensive trade and investment agreement?

Our most logical partner in the business world arena are the Americans. If we just look at numbers, the EU and the US still produce over 50% of the global GDP. They have by far the biggest investment relationship. Americans have invested in Belgium three times what they have invested in China.

It’s a fact. Over 70% of US foreign direct investment comes to Europe.

Really, we want to have an open market place with the US. In Los Cabos, at the last G20 summit, Presidents Obama, Van Rompuy and Barroso have clearly said that they will start official negotiations for this trade agreement and I believe it will start after the US elections.

The administrations in Washington and in Brussels are preparing for these negotiations. 

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