¡¾Chinese Entrepreneurs¡¿The industrial enthusiasm of the steam engine era has quietly rekindled in Europe, but it is an arrogant illusion that China can share the dividends of re-industrialization through mergers and acquisitions. This feast has not yet reserved seats for Chinese companies.

Reporter Yang Jing Huang Wenxiaowen_Reporter Yang Jing Editor He Yifan

Opening

Driving north from Gothenburg, we arrived at the Saab town-Trollhaettan (Trollhaettan) after an hour and a half. This road is rarely visited. Due to the "sleeping plan" of the original major shareholder General Motors of the United States, the Saab factory has changed hands several times. The Gothenburg media used "one woman married four Chinese people" to describe Saab's rough fate.

The Saab production line in Trollhaettan has not yet been restored. Since Saab Automobile went bankrupt last year, the unemployment rate here has doubled to more than 20%. Today, King Street where Saab is located is no longer prosperous, and a famous local nightclub also closed down after Saab went bankrupt.

The decline of Saab and Trollhattan is a microcosm of the struggle of European industry. The Port of Hamburg in Germany is planning a new round of price cuts. A large advertisement in the newspaper reads: freighter prices will be reduced by 3,000 euros, and the cost of transshipment container ships will be reduced by 20%. This has affected Chinese companies. A Fu employee of China Ocean Shipping Group in Europe complained that business is not as good as before, many shipowners have lost tens of billions, and the shipyard has not received any orders this year.

Due to the decline of manufacturing, France's unemployment rate hit a decade-high 10.3%. After 2009, European industry faced difficulties such as declining sales, rising costs, and declining profitability. Data from December 2012 showed that the shrinkage of the Purchasing Managers' Index (PMI) of the German and French manufacturing industries deepened, and the initial values of the French and German manufacturing PMIs in December were lower than expected. In November 2012, the unemployment rate in the eurozone rose to 11.8%. After more than a decade of deindustrialization, Europe has become like a rusty machine.

But this is only half of the story. Another force is also growing vigorously. The European Union has proposed re-industrialization. It is expected that by 2020, the proportion of manufacturing in the GDP of EU countries will rise from the current 16% to 20%. Walking in Europe, it is not difficult to feel that the industrial enthusiasm of the steam engine era is quietly rekindling.

Mr. Sautter, Deputy Mayor of Paris

In Paris, we met Mr. Sautter, the deputy mayor in charge of employment, economic development and international attractiveness. As soon as the photographer pressed the shutter, he shouted in English: Welcome to invest in France! On the morning of November 23, we had breakfast with Mr. Sautter, members of nearly 10 associations of Chinese enterprises in France. He told us that the Paris Economic Development Agency has set up a commissioner in charge of Chinese affairs to facilitate Chinese companies to invest and operate in Paris.

"China has become an important source of investment in Europe." Sautter said. The scenario of container trade in Hamburg Port in Germany provides a footnote to his judgment: one out of every three containers comes from China. If the volume of cargo to and from China drops by one point, the entire report card of Hamburg Port will become as ugly as if it had been burned. Gothenburg, the second largest city in Sweden, has a population of 500,000, of which 70% of the residents live in contact with China. From January to October 2012, the trade volume between China and Europe reached 452.83 billion US dollars, which is also the second consecutive year that the bilateral trade volume has exceeded 500 billion US dollars. The EU has become China's largest trading partner.

In the first half of last year, the transaction volume of Chinese companies' mergers and acquisitions in Europe increased by 58% compared with the same period in 2011, reaching 7 billion US dollars, accounting for 31% of the total overseas mergers and acquisitions in the same period, and a large number of transactions were concentrated in the manufacturing industry. There is no need to draw up that long list. In Germany, which is known for its manufacturing industry, electronics manufacturer Medion AG, global leader in hydraulic technology KION, construction equipment companies Putzmeister and Schwing, and auto parts manufacturer Kiekert, all have or will have a Chinese boss. In a public speech at the end of 2011, Li Rongrong, former director of the State-owned Assets Supervision and Administration Commission of the State Council, once pointed out that the weak economy in Europe and the United States is a good investment opportunity for China's machinery and equipment manufacturing companies.

Thinking that China can share the dividends of Europe's re-industrialization through these seemingly sweet engagements is an arrogant illusion. China can participate in it mostly in the stock assets of European industry, while the incremental assets of Europe's "new industrial revolution" are comprehensive industrial upgrades built by raw material innovation, green energy, microelectronics and nanoelectronics technology, and robotics technology. There is no seat reserved for China in this feast. Although Europe needs the Chinese to play the role of "white knight", it rejects the introduction of the "Chinese model" into this continent. They believe that industrial revival based on low wages will not benefit the people and the country.

On the first day back to China, I found a red and blue machine on the big table in the office area. This is the legendary 3D printer. A young colleague was happily using it to print Santa Claus for everyone. I must admit that it is not as mysterious as I imagined. It is a bit like the injection molding machine that was popular in China's township enterprises 20 years ago.

While we were watching Santa Claus-making similar models is also the most common use of 3D printers in China. The Belgian company Mellot has begun to cooperate with a textile factory in Qingdao, China to "print" textile machine bearings. Parts that traditional industrial processes take 84 hours to complete now only take 24 hours, and the cost of each bearing has dropped from dozens of euros to 1 euro.

It took 30 years for China to finally enter the sequence of global manufacturing powers. In the past decade, it has no longer been limited to producing cheap shoes and parts, but has released its energy on basic industries and precision products. A common idea is that if there is enough time, Made in China will eventually completely defeat all its teachers. However, seeing the industrial changes taking place in Europe and the United States, and the forces behind the changes, and comparing them with the concerns about the hollowing out of industry in China in recent years, one cannot help but worry that China will lose again at the starting line of a new round of industrial upgrading.

We can extend the time interval. When the first industrial revolution occurred, the Qing Empire was at the peak of prosperity. In the 42nd year of Qianlong's reign (1777 AD), the court reiterated that it was not allowed to use bird guns in the military examinations, and the competition of sword dance and archery was still held. Five years later, the British Watt, who had experienced several bankruptcies, finally succeeded in improving the steam engine. In the 58th year of Qianlong's reign (1793), the emperor met with the British envoy Macartney at the Summer Resort and arrogantly claimed that "the Celestial Empire is rich in products and has everything. It does not rely on foreign goods to exchange what it has and what it does not have."

The "Needham Mystery" that has caused widespread discussion is: Why did China's science and technology still be more advanced than Europe until the Middle Ages, but the Industrial Revolution did not take place first in China? In 2012, Professor Gu Keli, director of the Needham Research Institute in London, proposed the "New Needham Mystery" to visiting Chinese private entrepreneurs, that is, China is becoming rich and powerful, but is China's social organization conducive to rapid scientific and technological innovation? This is a question that is crucial to China's future.

The European special mission team of "China Entrepreneur" magazine, a team of three people, spent 23 days trying to describe Europe wandering at the entrance of the "new industrial revolution" tunnel. We paid more attention to Germany and France, the champion and runner-up of the European economy. Their excitement, disputes, hesitation and confusion at this historical moment may provide reference for how China should face the "New Needham Mystery".

French "Blue Eagle"

The Grand Hotel in Stockholm, Sweden is being renovated. It is said that in April 2012, when Chinese Premier Wen Jiabao rested here, the outer wall had already started, and 8 months later, when Chinese writer Mo Yan stayed here, the iron frame was still there. Three years ago, the governors of the five northern German states jointly wrote to German Federal Chancellor Merkel, asking for the widening and deepening of the Elbe River to maintain the international status of the Port of Hamburg. When we arrived in Hamburg, the state parliament had just confirmed the time for another discussion with environmental organizations.

This is the European speed. The industrial revival plan is also advancing at a slow pace. As early as four years ago, some European economists realized that European countries should also make up their minds to carry out the industrial revolution by learning from the United States' "re-industrialization" plan in 2009. Until January 2012, European countries were still reflecting on the reasons for the decline in national competitiveness, but Standard & Poor's had lowered France's national credit rating to Aa1, and in November 2012, Moody's also downgraded its rating.

Rebuilding France's competitiveness and eliminating the pessimism of this proud country have become important tasks for the new President Hollande. During the campaign, he promised to reduce the fiscal deficit to GDP from 4.5% to 3% by 2013, which is equivalent to the level when the euro zone was first established.

"In recent months, France has been arguing over this issue," said Panno, general manager of the Paris branch of the Bank of China. According to this account, France will save 30 billion euros (about 38.8 billion US dollars) in the budget this year. Only one-third of this will come from fiscal spending cuts, and the remaining 20 billion euros will rely on industrial revival.

"In terms of industry, France has a very good foundation. In Europe, its aerospace and nuclear energy industries are ranked first; chemical and agricultural products are ranked second; and the third-ranked industries are telecommunications and pharmaceuticals." David Appia, Minister of Investment of the French Government, recited a series of numbers in an exclusive interview with this magazine. According to the recent Thomson Reuters Innovation Survey, "100 Most Innovative Companies in the World", 13 French companies or research institutions are on the list. He added, "First, we have very good engineers and technicians, and our employees have received higher education; second, we insist on innovation and invest in research and development on a large scale."

"No French government can implement so many reforms in such a short period of time." Pierre Moscovici, Minister of Economy and Finance of France, wrote in an article.

In November 2012, we were interviewing in Europe when Hollande held his first press conference at the Elysee Palace since taking office. A month ago, the Hollande government launched the "October Reform" and commissioned Louis Gallois, former chairman of the European Aeronautic Defense and Space Group (EADS), to make a report on industrial competitiveness. In a two-hour press conference, Hollande introduced the significance of the actions taken since taking office for six months.

Hollande, who is chubby and round-faced, is known as "cup caramel pudding". He is short and fat, and often wears a loose, unwaisted suit. In addition, compared with his predecessor Sarkozy, "this metaphor is not an exaggeration at all. It is simply "jelly trembling in a bowl and cup." A translator serving in the French government department told us.

After this press conference, Hollande's image in the hearts of the people has reversed greatly. He wrote a book called "The French Dream" and now seems to be the person who will realize this dream. "For many centuries, an iron rule that has been highly respected by the French is that only the sense of mission to become a great power can awaken France. And Hollande has become the person who awakened France's sense of mission to a certain extent." said Jean-Herv¨¦ Lorentz, a famous French economist.

On May 16, 2012, French Prime Minister Jean-Marc Ayrault completed the formation of the cabinet. The Ministry of Economy, Finance and Industry was split into the Ministry of Reindustry and the Ministry of Economy, Finance and Foreign Trade, and the Ministry of Small and Medium Enterprises, Innovation and Digital Economy was set up under the Ministry of Reindustry. For this reason, France established a public investment bank, whose role is to support the development of small and medium-sized enterprises.

The Ministry of Reindustry is also called the Ministry of Production Revitalization. The new French President Hollande once mentioned that in order to have a good economic growth point, there must be a good industry. "Reindustrialization" is one of the most important tasks of the Hollande government.

"To be honest, my friends, including me, were pessimistic about Europe and France in July 2012. Is Europe really going to fail?" Panno told us, "But since the second half of the year, the situation is not as bad as imagined, and everyone's confidence seems to have returned."

Some radicals even hope that under the leadership of France, a "Blue Eagle Movement" can also appear in Europe. This is a term borrowed from the United States. It was launched by the Roosevelt administration in 1930 when the United States passed the China Industrial Recovery Act. "During the honeymoon period of the New Deal, there was a true love marriage between the president and the people. Both sides may be a little irrational, but they still believe that the other party is absolutely reliable - but then again, love is beyond logic after all." American scholar Dixon Weikert recalled in his book "The Great Depression".

Hollande has some similarities with the situation faced by Roosevelt back then. Both inherited a mess of economic recession and high unemployment. They both belong to the left wing, believe in Keynesian interventionism, and believe that government intervention can help the economy recover as soon as possible. Both have social support for strengthening government intervention, and they both benefited from a failed predecessor.

Who is in charge of the revival

I really don't want to quote the universal opening of Dickens's "A Tale of Two Cities". He used a set of contradictory parallel sentences to describe the feelings of ordinary people who were swept into the early days of the First Industrial Revolution. However, it is still appropriate to use it to describe the wave of industrial revival this time: It was the best of times, it was the worst of times... We are all heading straight for heaven, we are all heading straight in the opposite direction.

Unlike the United States, no think tank can make an American-style plan for the 27 EU countries and 17 eurozone countries to recreate a "unified" real economy in Europe. The differences between major European countries on who is the protagonist of the "new industrial revolution" are no less than in the financial field.

In October 2012, the EU introduced the "New Industrial Revolution" strategy. On November 8, it also introduced the "Automobile 2020 Action Plan", which is the first achievement of the "New Industrial Revolution Strategy". The EU hopes to use the automotive sector as a driving force for the full recovery of the manufacturing industry, and also claims to give the automotive industry "all possible political support". On January 4, 2013, the European Commission announced that the regulations for implementing the "Euro 6" emission standards for some new buses and heavy trucks have officially come into effect since December 31, 2012. As soon as this plan was released, many EU countries believed that it was "completely on the side of Germany".

On January 9, French government officials proposed that Peugeot Citroen acquire Opel, a partner of General Motors, to form a new auto giant to compete with Germany's Volkswagen. On January 10, the French government made a request to the European Commission, hoping to approve the rescue plan for Peugeot Citroen's financial department.

The relationship of "close enemies" between France and Germany has been maintained for a long time. In the past, it was common to describe France as the "political driver" of Europe, while Germany was the "economic driver" of Europe. However, after Sarkozy became the president of France, the European situation changed to German Chancellor Merkel making decisions, and then Sarkozy held a press conference to explain her decisions. Now, this difficult problem has been handed over to Hollande.

From the data, Germany has more advantages in industrial revival than France: in 2011, the French government debt exceeded 90% of its total economy, while Germany's economic indicator has been reduced to 80%; in 2012, the unemployment rates of France and Germany were 10.3% and 6.8% respectively; France's fiscal budget deficit in 2013 basically could not be reduced to less than 3% of China's GDP that year, but the German government is about to usher in a "zero deficit".

In fact, the shadow of Germany can also be seen in the plan being implemented by France. In the past decade, the French industrial sector has lost 750,000 jobs and 900 factories. One of the purposes of re-industrialization is to solve the current serious unemployment crisis. The Hollande government hopes to achieve this goal through the "National Pact for Growth, Competitiveness and Employment", which includes a plan to gradually reduce labor costs for employers over the next three years, which is the driving force of France's new industrial revolution.

Since the start of negotiations on October 4, 2012, French labor and management have been negotiating how to make the labor market smooth while giving companies more flexibility and employees more protection. On January 10, French labor and management handed over a plan for "job security" to the Hollande government.

In 2003, Gerhard Schr?der, a socialist who served as German Chancellor, launched the "Recovery Plan" to completely reverse the economic recession that had plagued Germany for more than a decade. The core of the plan was the "Hartz Recommendation" proposed by the Hartz Commission. After the full implementation of the "Recommendation", those who do not work and refuse to receive training will be restricted from receiving unemployment benefits. In addition, it also relaxes restrictions on corporate layoffs.

Success and failure are both due to Xiao He. Although the "Hartz Recommendation" has greatly increased Germany's strength, the people do not buy it. Wage increases are rare in Germany. In 2011 and 2012, German companies¡¯ employee wages increased by a maximum of 2.5% to 2.6%, so strikes often occur.

¡°If the French employment plan is passed and labor costs fall, I will choose to stay in France and expand production.¡± A senior executive of a Chinese company who insisted on anonymity said that he had been paying attention to the new industrial revolution in EU countries since October last year. He believed that France should learn from Germany in this regard and implement the bill more resolutely and toughly to activate industrial vitality.

Once, when we were taking a train from Lyon to another city, it suddenly stopped halfway. The radio said, "Everyone, please be patient. The driver went to join the strike." We could only take the bus to our destination.

In Germany, the same "luck" has come again. This is not surprising. The most reliable German railway system has now become a bad example, with a train delay rate of 27.4%.

On the pessimistic side, France and Germany finally have something in common. "The difficulty of industrial revival is really unimaginable." An economic development consultant in Paris analyzed, "Whether it is the new industrial revolution or the reindustrial plan, money will be needed in the end. Finance will make it or break it."

China's role

There are always places that cannot be covered by the haze, and Chinese consumers are that ray of sunshine. The Galeries Lafayette and the Champs-Elysees shopping malls in Paris are always crowded. Symphonic music is played in the three- or four-meter-high windows, and Chinese puppets dance and beat drums. At the Dior counter, bottles with Chinese blessing words are quickly packed into boxes and handed to the Chinese.

Many restaurants in Europe politely refuse Chinese people to pay by credit card, "If there is no euro, RMB is fine." The owner of a Chinese restaurant told us that it is necessary to be thrifty, "If you use a credit card, you have to pay a handling fee, and I have to pay it too, it's really not cost-effective." However, he still thanked the yellow faces in the full house, "In the past, there were local French people who came here to eat, but now you can see that they are all brought by Chinese tour groups, and there are fewer and fewer local people." In order to reduce costs, he used to close one day a week, but now he has two days a week. But if there are no Chinese customers, "I'm afraid I can only open two days a week."

These street consumptions are just superficial. In 2012, Chinese companies carried out several mergers and acquisitions in Germany, "one order is bigger than the other." Meng Fanzhuang, Minister Counselor of the Chinese Embassy in Germany, told us, "The Germans are very worried." China has always been the "world's factory", and Germany calls itself the "factory that makes the world's factory". When "Made in China" becomes "Chinese acquisition", it is not a pleasant thing for Germans.

In Germany, the resistance faced by Chinese people starts from visa application - the family members of employees of Chinese-funded enterprises need to take German language qualification test to apply for visas. "This is quite bad." Pei Yonggui, Economic and Commercial Counselor of the Chinese Consulate General in Hamburg, Germany, said, "I sometimes joke that employees of German companies who go to China to apply for visas, do they also need to take Chinese language qualification test?"

French companies have also had repeated frictions with China over African policies, accusing China of "neo-colonialism". In early December last year, French Minister of Economy and Finance Pierre Moscovici told the BBC that French companies must resist China's influence and take the initiative to compete in the African market.

The fact is that in the European industrial renaissance, China has been lingering outside the door when it comes to high-tech added value. We were invited to visit a factory in the French competitiveness cluster. After arriving, we found that it only produces aluminum alloy utensils. The special thing is that the utensils are used to store genetic samples, and the real genetic engineering with gold content must be highly confidential. When we asked a government think tank expert if we could learn about France's core competitive industries, he briefly introduced the situation and told us directly that the door to France's real high-tech club is only open to the French and a few Germans.

Even if the stock is activated, it is not that simple.

Setter Walls is the oldest law firm in Gothenburg. Joakim Edoff, CEO and managing partner of the law firm, believes that the Chinese are often too anxious. "They often do business against normal procedures. For example, Youngman Automobile planned to acquire Saab, but it came in relatively late. If we divide mergers and acquisitions into four stages: negotiation, contract signing, payment and handover, Youngman went straight to the third stage. In other words, Youngman Automobile paid Saab a sum of money to restore the production line and pay workers' wages without signing an acquisition contract with Saab, and ended up wasting hundreds of millions of yuan."

"Many Chinese companies coming to Germany don't like to spend a lot of money on lawyers and time on research," said Arnaud Favry, head of the China region of the Hamburg Summit in Germany. "As a result, they often encounter bigger traps."

Anders Holmgrem, another partner of Setter Walls, pointed out when talking about doing business with the Chinese that this requires more trust, communication and patience. They may have met with Chinese representatives many times, but the real decision maker has not yet appeared. "This is a rather troublesome matter. There are too many levels of reporting, and the person who makes the final decision on this matter may not be within the company."

Walking into Saab's factory that has stopped production, most of the 80 or so employees who stayed in the factory of more than 7,000 square meters were wiping machines and cleaning the factory. To prevent rust on the production line, they cannot miss any screws or nuts. Mikael Ostlund, spokesman for the Swedish National Electric Vehicle Company, told us that Saab can resume production at any time as long as the conditions are ripe. After returning from Europe, we called Mikael Ostlund again, and he told us that the latest change in the factory is that more than 70 people have been added, and the production line is still waiting for orders.

Europe's industrial renaissance is also waiting for a real restart, and the role that China can play in it is still unclear.

Plastic Industry Video