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27/09/2016

German digital fair showcases China relationship

Digital

German digital fair showcases China relationship

Angela Merkel with CEO Alibaba Jack Ma at CeBIT

[Deutsche Messe with permission]

German Chancellor Angela Merkel yesterday (15 March) urged closer high-tech cooperation with China as she opened a major IT business fair with the Asian giant as official partner country.

“German business values China not just as our most important trade partner outside of Europe but also as a partner in developing sophisticated technologies,” she said.

“Especially in the digital economy, German and Chinese companies have core strengths […] and that’s why cooperation is a natural choice.”

Merkel was speaking at the opening the CeBIT fair in the western city of Hanover, where more than 600 Chinese companies will exhibit their tech marvels this week, showcasing the country’s rise as an IT power.

China’s information and communication technology has bucked the country’s wider slowdown in economic growth and is booming in what is now the world’s biggest smartphone market with the highest number of internet users.

For Germany, Europe’s top economy, the event aims to further cement business ties with fellow export power China as both seek to adapt to the sweeping digitisation of the world economy. Germany is already by far the biggest European economic player in China.

Two-way trade last year reached €150 billion. Both countries have declared 2015 the year of their “innovation partnership”.

Germany – “land of thinkers”

Chinese Premier Li Keqiang in a video message praised Germany as “an industrial powerhouse and land of thinkers” and said he looked forward to more German-Chinese cooperation in “web-based, digital and intelligent technologies”.

He said both countries’ digital strategies complement each other and that he hoped “to further strengthen our comprehensive strategic partnership and embark together on a path of win-win cooperation and joint prosperity in the world”.

The almost three-decade old CeBIT once dazzled consumers with gadgets but has been overshadowed by big tech events in Las Vegas and Barcelona, leading it to focus on business users.

Last year IT professionals made up more than 90% of the more than 200,000 visitors.

China’s huge showing “makes it the biggest and strongest partner country presentation we’ve ever seen at CeBIT,” said top exhibition executive Oliver Frese.

Its tech giants including Huawei, Xiaomi and Lenovo filled more than 3,000 square metres (30,000 square feet) of exhibition space.

Digitisation going east

“China was known as a supplier of components and later as a supplier of hardware, smartphones, tablets and also PCs,” said CeBIT spokesman Hartwig von Sass.

“Now China has numerous companies that have become world leaders. We see this as a shift on the world map. Digitisation is going east.”

The head of German IT industry group BITKOM, Dieter Kempf, expressed awe at the scale of the Chinese market.

“This consumer market in China is something we can barely comprehend, more than 1.2 billion people with significant pent-up demand for IT solutions, which is far beyond European dimensions,” he told AFP.

The keynote speaker at the opening ceremony was China’s richest man, Jack Ma, head of online merchant Alibaba – China’s answer to eBay and Amazon – who shared his vision of the future in a talk brimming with enthusiasm.

The choice of China as CeBIT partner country throws a spotlight on its huge Internet surveillance system dubbed the “Great Firewall of China”.

Human rights group Amnesty International protested outside the opening ceremony with several dozen activists against China’s treatment of critics, including jailed Nobel Prize laureate Liu Xiaobo.

“The German government should permanently place human rights on the agenda again and consistently demand adherence to human rights,” said Amnesty activist Pamela Klages.

“We see it as dramatic that economic ties are now so prominent and that human rights have moved so far into the background.”

“China is the second-biggest IT market in the world after the US, it’s very dynamic, it’s still developing,” said Angela Stanzel, China expert at the European Council on Foreign Relations.

Speaking at the opening ceremony, Chinese Vice Premier Ma Kai said his country wants “to promote breakthroughs in technology in areas such as integrated circuits, the Internet of Things, cloud computing, Big Data and the fifth generation of mobile telephony.”

China “is no longer the world’s factory,” said IDC analyst Kitty Fok. “China is a big enough market to allow a Chinese brand to become a global brand.”

Some Western countries resist opening their doors to big Chinese players such as Huawei, over fears of military links and industrial and other espionage.

“If the Chinese side gains access to the data from sensors, for example in cars, then this impacts the trade secrets and patents of German companies,” said Hauke Gierow of Germany’s Mercator Institute for China Studies.

“Because of these security concerns, many foreign companies are so far shying away from using Chinese Cloud and Big Data providers.”

Despite such fears, however, industrial powers such as Germany would snub China at their peril, Stanzel told AFP.

“We could ignore China, we could refuse to work with China,” she said. “I think the best way is to integrate China. So I think actually the CeBIT is a very good way to do so […] to see where there are areas of cooperation.”

Jost Wuebbeke of the Mercator Institute said that, while “many Chinese IT companies became so big because they successfully copied business models from abroad,” these days they “often go beyond their foreign counterparts.”

“They develop apps further, adapt them to Chinese users and spawn their own innovations. Many young startups of the internet economy have many new ideas.”

WeChat – an example of Chinese innovation

He pointed to the wildly popular app WeChat by Chinese social media giant Tencent.

“It was originally created as a WhatsApp copy, but is now a social platform and a hotspot for e-commerce, and therefore much more successful than the real thing.”

Amid the Chinese IT boom, big Western players grumble at restrictions to China’s massive market.

“Especially in IT, the Chinese government is currently setting up new hurdles,” said Gierow.

“This mainly affects suppliers of security-sensitive technologies, but also increasingly other software and hardware suppliers” including Microsoft, Cisco and Apple.

So, are the established tech giants doomed in the face of China’s breakneck rise? Not just yet, say industry observers who point out that so far the Chinese market has impressed with scale rather than quantum-leap innovation.

In terms of high-tech manufacturing industry, Germany remains a leader from whom China hopes to learn, said Stanzel. “I think the very long-term advantage that we have and we will continue to have is innovation.

“It’s something that you cannot copy-and-paste, like many other things […] you can buy innovative products, but you cannot buy being innovative.”

Background

Chinese Foreign Minister Wang Yi last week (8 March) called to boost European trade links on the fringes of a plenary session of the 12th National People's Congress, China’s 2,987-member strong legislative body.

“The emphasis [of Chinese foreign policy] will be on promoting infrastructural connectivity, and building overland economic corridors and pillars of maritime cooperation,” said Wang in relation to China’s so-called “belt-and-road” priorities.

"Belt and road" refers to Chinese President Xi Jinping's plan to connect Asia and Europe.

>> Read: Beijing calls for new 'Silk Road' between China and Europe

Meanwhile Europe is keen to garner Chinese investment, especially in connection to the digital economy and future network infrastructure such as 5G.

Günther Oettinger, the EU Commissioner for digital economy and society, launching the EU’s ‘5G vision’ in Barcelona earlier this month (6 March), signalled his intention to sign a deal with the Asian giant this year.

The move sees a growing tie-up between the EU and Asia, following an agreement reached last year to team up with South Korea on 5G.

>> Read: Next wave of innovation waits on 5G connectivity