Although the coronavirus has shaken supply chain and market globally, the President of the European Chamber “awake at night” in China is in the expectation of Europe being a target for the US-China tech battle.
Jörg Wuttke, who is the cheif representative of the German petrochemical giant BASF in China, said that “it is difficult to stand aside when two elephants dance together and are not impacted.”
China is beginning to recover, infecting more than 8.3 million people, from the coronavirus first discovered in the central city of Wuhan in December until it spreads around the country. After an outbreak in Beijing last week, fears for a second wave started to grow.
But the coronavirus is “a challenge that I think we can address,” said Wuttke from his home in Beijing via a video link.
He decided to attend the launch, of a confidence survey from the chapter in Guangzhou on the south of China but stayed away due to the re-emergence of the Corona-virus in the capital.
European businesses are actually “in the cold” because of the virus uncertainty, Wuttke said. Nevertheless, he sees the cross-fire between the US and China as a long-term threat.
“It’s going to be something which is going to last longer when it comes to the US-China trade war, the tech war which is unfolding, the chance of the finances war, it will get harder and it will cause great uncertainty,” he said.
“We are totally reliant on US semi-conductors, just as China does,” he added. Here too (in China) we have a huge market. “Of course, the main fear is that the U.S. or China come to us to ask, ‘You are moving for us or against us – please make a choice?'”
In May 2019, the United States made a trade blacklist of Chinese Huawei Technologies, raising national security issues. Trade Minister Wilbur Ross confirmed that the worries continue, including those of 5G on Wednesday.
The move effectively banned U.S. companies from doing business with the world’s largest machine tools for telecommunications networks, and thus ended up with a trade battle between the world’s largest economies.
Wuttke said that in China, particularly in innovation areas such as 5G, European companies remain confronted with unequal rivalry, following years of lobbying.
“Ericsson is competing with Huawei in snatch-up orders (in the Middle East) with Africa and Asia and, of course, Europe,” he said. “Here however they cannot compete either, which obviously gives you a massive disadvantage since China is around 50% of the future 5G market.”
The South China Business Confidence Survey showed little desire for its participants to quit the region, where they have near ties to manufacturing supply chains, with 88% stating they had no intentions to move over the next three years.
However, the wider chamber confidence study also showed that 44% of respondents anticipate the regulatory environment to worsen in the next five years.
The apparent contradiction was explained by Wuttke because companies remain confident of China’s growth opportunities, which his company expects to account for 30 % of global growth over the next decade, on a conservative basis. “We want to participate in this show, we want to be a part of this pattern of growth,” he said. South China even continues, to deliver international companies in the best environment for working in China, stated George Lau, Chamber Vice President and General Manager of the certification company TÜV Rheinland.