Batteries from Saarland + Football salaries decrease
The Saarland becomes major battery location
Money football collapses
Daimler Trucks and CATL intensify cooperation
Investigation after deaths at marathon
More and more millionaires
Beijing’s population is growing and getting old
Rhenus opens axle plant in Shenyang
Opinion: dialogue on the precipice
Dear reader,
Car manufacturers worldwide see electromobility as the future, which is why batteries are becoming a crucial component for the entire industry. It is, therefore, fitting that Germany is currently evolving into an extremely popular location for battery production. Two Chinese manufacturers have chosen Germany as an investment location. After CATL in Thuringia, SVOLT now wants to produce EV batteries in Saarland. Marcel Grzanna analyses what Germany – and Saarland in particular – has to offer the large Chinese manufacturer.
That China and Germany can go well together in the field of e-mobility is also shown by the news that Daimler Truck AG and battery manufacturer CATL are further expanding their cooperation. Initially, CATL is to supply the lithium-ion batteries for the all-electric Mercedes-Benz eActros LongHaul. But both companies agreed on a much more far-reaching cooperation.
Meanwhile, our Feature on the financial situation ofChinesefootball shows what is possible in China when the president wishes for something. Billions have been invested, players and coaches from all over the world have been lured to the People’s Republic, and entire clubs have been bought – money is not an issue. A wild hustle and bustle developed around Chinese football, in which a goal sometimes costs a measly €10 million. But at the start of the new season, the results are disastrous. Even the reigning champions no longer exist. Now China’s rulers are intervening.
A truly terrible report reached us from Gansu. There, 21 runners lost their lives during an ultra marathon. Shortly after the start, the participants were surprised by a violent drop in temperature, hail, freezing rain, and strong winds. On Monday, authorities launched an investigation. The accusation: The organizers allegedly ignored warnings about the change in weather.
Hard to believe, but Germany is slowly but surely turning into a popular location for battery production for EVs. Daimler has started manufacturing its own high-performance battery systems at its traditional Hedelfingen plant, Volkswagen is investing in the production of future-proof solid-state batteries in Salzgitter, Porsche wants to build a battery factory for high-performance cells in Tuebingen, and Opel parent Stellantis plans to produce in Kaiserslautern in the future.
For no less than two Chinese companies, the prospect of local self-sufficiency for German carmakers is apparently no obstacle to realizing big plans in this country. After CATL in Thuringia, another major producer from the People’s Republic, SVOLT in Saarland, wants to invest billions in its expansion in Europe. There is talk of up to €2 billion in Saarland, while CATL is expected to invest around €1.8 billion. “We see some very innovative companies in Europe, but we don‘t see them as competitors; we see them as market companions,” says SVOLT’s Head of Europe Kai-Uwe Wollenhaupt in an interview with China.Table. “Healthy competition is important to drive innovation in range, fast-charging capability, sustainability and safety.”
But competition is also why the price of batteries is falling continuously. A few years ago, car manufacturers were still paying several hundred euros per kilowatt-hour of power; today it is only around €100. The trend: a continued fall. “We assume that in 2025 there will be cost parity between the conventional combustion engine and battery EVs without carbon emissions – at €65 per kilowatt-hour,” says Wollenhaupt. That sounds like a declaration of war for an already fiercely competitive market.
Price war for batteries drives EV demand
But does such a huge investment make sense in the face of falling prices and increasing competition? Or is it really an incalculable risk for the companies? No, says Wollenhaupt. Because the calculation looks different: Falling prices for the kilowatt-hour will further increase demand for EVs because they will in turn become cheaper for consumers. The battery manufacturers will then generate the necessary sales through the masses. Wollenhaupt is certain: “The demand from the automotive industry in the coming years will be enormous. Batteries from SVOLT alone will not succeed in meeting this demand.” Annual production capacities of 24 gigawatt-hours are to be created at two sites in Ueberherrn and in Heusweiler, 30 kilometers away. Up to 500,000 EVs could be equipped with them.
The Saarland is glad to have landed a big fish with the Chinese company. Dozens of other locations on the continent had been examined by the Chinese for the cell factory, on the one hand, and the pack and module production on the other. Among other things, the geographical location with the proximity to France, where the Stellantis brands Citröen and Peugeot are based, spoke in favor of the Saarland. Lavish subsidies are probably another reason.
Competitor CATL collects €13.5 million for its commitment from the state of Thuringia alone. According to the Saarland Ministry of Economics, the amount of the subsidies for SVOLT has allegedly not yet been finally decided. What is clear, however, is that SVOLT will benefit from GRW funding for structurally weak regions, among other things. The subsidy is linked to legally binding conditions for the creation and safeguarding of permanent jobs. In the Saarland, up to 2000 jobs are to be created. In addition, the company can expect possible taxbreaks and good conditions for building loans and for the purchase or lease of land.
Millions in subsidies and aid
Here, too, the company benefits from the concession of the Saarland state government, whose Strukturholding Saar bought the land for use by SVOLT to save the investor time and effort. It is apparently still unclear whether SVOLT will later act as buyer or leaseholder of the building land. “Currently, the various agreements for the further concretization of the project or the contractual arrangement are in coordination,” explains a ministry spokesman. The corresponding model will be developed, taking into account all obligations and framework conditions resulting from the subsidy guidelines, state aid, and competition law, as well as the requirements of the investors.
Funding, geographical location, and relative proximity to the headquarters of numerous European carmakers would perhaps be reason enough to invest on German soil. Companies in all sectors also like to take up the argument of short distances to reduce emissions. But this is only a pleasant side effect of strategic considerations. Chinese companies also need to take precautions should the trade dispute escalate further and exports from China to Europe become more difficult – they need to secure supply chains and become more regionally flexible, too.
“One of the biggest plus points of Germany as a location is the good level of education of the available workforce,” says Bernard Bäker, Professor of Automotive Mechatronics at TU Dresden. The Chinese have good expertise in cell chemistry, but “if you’re producing in high volumes, you need above all a special reputation for production technology that leaves little margin for error.” Here, he says, the Germans are still clearly superior to the Chinese. Acceptable component tolerances in the production batches of the cells are “extremely important.” The researchers note production-related differences in cell capacities of several percent. One of the decisive factors is the quality of the electrodes used, which influences the load capacity of the cells and thus their quality over the operating time.
Wollenhaupt can confirm this in practice. “To produce a good battery cell, around 3,500 different parameters have to be taken into account, which is why highly qualified employees and high efficiency are extremely important,” says the SVOLT European head. Researcher Bäker considers the production of batteries to be at least as complicated as the construction of microchips. SVOLT’s success in Saarland is thus likely to be measured internally by the so-called reject rate, precisely the quantity of batteries that do not reach optimum quality due to errors in production and later have to be sold at a lower price. The manufacturers of EVs are given preferential treatment because their motors have to be powered by top batteries due to the high load. Electric lawnmowers or electric boats, on the other hand, which are used much less than cars, can be equipped with less resilient batteries.
Batteries
Car Industry
Electromobility
Kai-Uwe Wollenhaupt
Porsche
Football: big money time is over
Just imagine it: Borussia Dortmund becomes the German football champion – and shortly afterward is kicked out of the Bundesliga. Unimaginable? Not in China. There, Jiangsu Suning won the Chinese Super League title for the first time – and only a few weeks later, stopped playing. The news caused ripples even as far away as Europe, and fans were shocked. “I can’t believe it because we just won the league championship,” Jiangsu fan Lan Zihan told Reuters news agency. But Jiangsu Suning’s fate exemplifies the financial woes of Chinese professional football.
It was December 2015 when electrical retailer Suning took over the local football club at its Nanjing headquarters and renamed it Jiangsu Suning. The company subsequently poured a lot of money into the club. Stars such as Ramires (from Chelsea London) and Alex Teixeira were lured to China, and the Italian star coach Fabio Capello was also bought. The club wrote red numbers because of the high expenses. But with Suning behind them, money was suddenly no longer an issue.
And with the money came success: the eagerly awaited championship title. But the popping of champagne corks turned out to be the champion’s last thunderclap.
Several clubs are threatened with extinction
Tianjin is currently facing a similar threat. In the port city not far from Beijing, two clubs played in China’s top division for a long time. Soon there could be none. While the Tianjin Jinmen Tigers (formerly Tianjin Teda and ex-club of Bavarian striker Sandro Wagner) are still desperately looking for a new financial backer, Tianjin Tianhai had to declare bankruptcy and withdraw from the Super League due to excessive debts.
Yet this club was considered particularly ambitious. Shu Yuhui – a billionaire from the pharmaceutical industry – bought the club, renamed it Tianjin Quanjian after his company, and invested millions: As a coach, he hired the Italian world champion Fabio Canavarro, they paid €35 million for Anthony Modeste to 1. FC Cologne. The striker is now back on the Rhine and has to sit mostly on the bench. Club owner Shu, however, is doing even worse. He is in prison for fraud.
China’s football clubs are on the brink of financial ruin. The list could easily be continued, for example, with Shandong Luneng: The club was kicked out of the Asian Champions League because it had not paid salaries for months. But how could it have come to this?
The absurdity of the situation is best illustrated by Carlos Tévez. The Argentinian striker, who was almost 33 at the time, had been scoring goals for top European clubs such as Manchester United, Manchester City, and Juventus Turin, but his best days were long behind him. But China was in a frenzy – and so Shanghai Shenhua (owned by the real estate company Greenland Holdings) lured the kicker to the People’s Republic. Tévez was offered a salary of €40 million net. As astronomical as his salary was, however, as earthly was his performance: For Shanghai Shenhua, Tévez scored a whole four goals. In other words, each goal cost the club €10 million. And he did Chinese football a disservice, saying of his time in China, “They just can’t play football.” And, “I spent seven months on holiday there.”
In addition, a lot of money flowed abroad. Chinese entrepreneurs invested heavily in foreign clubs: Wang Jianlin (of Dalian Wanda) acquired shares in Atlético Madrid; the household appliance manufacturer Suning invested more than $300 million in Inter Milan. In addition to club stakes, vast sums have been invested in broadcasting rights, licensing, and sponsorship. In 2017 alone, China’s entrepreneurs invested around $2.5 billion in the global football business.
Abrupt end of the boom
But then two factors put an abrupt end to the hustle: the Covid crisis and the decision-makers in Beijing. The pandemic hit China’s companies massively. Suning’s profits alone fell 140 percent in 2020 compared to the previous year. Corporate headquarters had to decide where to cut money. And so corporations like Suning are applying the red pen to their involvement in the football business first and foremost. “The pandemic and subsequent recession, strained international relations and an increasing focus on the national economy have led to Chinese companies losing interest in football,” says Cameron Wilson. He has lived in Shanghai for many years and regularly reports on the scene there on the website Wildeastfootball. The entrepreneurs had not put their money into the clubs for the love of football. “The conglomerates were financing the football clubs as a way of showing they supported the government’s goals in Beijing.”
While the rulers in Beijing made it increasingly difficult for citizens to invest abroad, entrepreneurs took advantage of the euphoria decreed by President Xi to move their money abroad. This allowed them to boast that they owned prestigious football clubs abroad – while identifying themselves as obedient members of the Chinese Communist Party. The clubs bitterly felt this all-too-superficial calculation during the crisis.
But it wasn’t just the Covid pandemic, the decision-makers in Beijing also ensured that the big-money era had passed with new rules. “Chinese club spending is three times higher than in Japan, and ten times higher than in South Korea,” Chen Xuyuan, Chairman of the Chinese Football Association, noted in horror. “This money football is eating away at the health of our sport.”
‘Healthy and civilized’
As an antidote, a 100 percent tax was initially introduced on transfer fees for players from abroad. The aim was to encourage clubs to invest more in Chinese players and, consequently, to invest more in developing their own young talent. Subsequently, strict salary caps were introduced: A team’s salaries may no longer exceed ¥600 million (the equivalent of $92 million) per year. The foreign players in the team are not allowed to earn more than a combined total of $12 million.
And the entrepreneurs were also up in arms. “They don’t care about the community, they don’t develop the clubs either,” said Louis Liu, secretary general of the Chinese Football Association (CFA). To ensure that club names are also “healthy and civilized” in the future, company titles and logos were stripped out. The serial champion Guangzhou Evergrande (of the real estate group Evergrande Real Estate) became Guangzhou F.C.; Shanghai SIPG (Shanghai International Port Group) became Shanghai Port, and Dalian Shide (Shide Group) became Dalian Pro.
Both the transfer tax and the salary caps are important steps to move Chinese football forward. Absurd transfer fees for foreign players and astronomical salaries made headlines around the world but had little to do with sustainable development. The result of the wild hustle is devastating: Within a year, 16 Chinese football clubs went bankrupt. One thing is now clear: The era of big money in Chinese football is over. Ning Wang/Michael Radunski
Chinese Communist Party
Sports
News
Daimler and CATL intensify cooperation
Daimler Truck AG and Chinese battery manufacturer Contemporary Amperex Technology Co. Limited (CATL) intend to expand their cooperation. This was announced in a joint statement by the two companies. According to the statement, CATL will supply the lithium-ion batteries for the all-electric Mercedes-Benz eActros LongHaul. The model is scheduled to go into series production in 2024. With a range of 500 kilometers per battery charge, it is expected to enable all-electric freight transport even over longer distances. The batteries are said to feature a high energy density with a long service life. They should also be charged quickly.
The supply agreement between Daimler Truck and CATL extends beyond 2030. Together, they also want to develop advanced batteries for the next generation of truck applications. The focus is on high modularity and scalability, they say. It said the goal is to use batteries flexibly for different applications and e-truck models. “By expanding our strong partnership with CATL, we will significantly accelerate our electrification strategy and play a leading role in making the industry carbon neutral,” said Daimler Truck CEO Martin Daum. CATL CEO Robin Zeng also expressed his satisfaction. “We are delighted to have further developed our existing partnership with Daimler Truck AG around our shared vision for an electric future.” Zeng was convinced that Daimler Truck would gain further market share with the help of the new cooperation.
Daimler Truck and CATL signed a supply agreement for lithium-ion battery cell modules for electric production trucks in 2019. Current vehicles include the Mercedes-Benz eActros, the Freightliner Cascadia, and the Freightliner eM2. Starting in 2027, Daimler Truck plans to supplement its vehicle range with series-production vehicles with hydrogen-based fuel cell drivesystems. rad
Batteries
Car Industry
Electromobility
Mercedes Benz
Investigation after Gansu marathon deaths
After a sudden storm killed 21 people in a 100-kilometer race in Gansu province over the weekend, the race’s organizers are under pressure. Authorities launched an investigation on Monday.
The ultra-marathon race in Gansu went through rough terrain in Jingtai County (Gansu Province). However, the 172 extreme athletes experienced a severe change in weather about 20 to 30 kilometers after the start: The temperature dropped, hail, freezing rain, and strong winds came up. Some of the blankets included in the athlete’s equipment were simply blown away. State media reported that the dead included Liang Jing, the winner of previous races, and Huang Guanjun, a hearing-impaired runner who won the marathon at China’s 2019 National Paralympic Games.
Outdoor and running sports are also experiencing a significant upswing in China. As elsewhere in the world, organizers are offering increasingly extreme and exotic settings for the events. In Gansu, the route took runners through particularly rough terrain, which made the rescue more difficult. Drones with heat sensors had been used to track down missing people, state media said. They reported that only the first 24 kilometers of the run were passable by car.
On Monday, state media reported that provincial authorities set up an investigation team to look into the accident. Apparently, the organizers of the marathon ignored severe weather warnings issued by the early warning center of Baiyin city. The Gansu provincial weather center had warned in a report on Friday of “sudden heavy rain showers, hail, lightning, sudden squalls” and other adverse weather conditions across the province. fin
Sports
Storm
Number of millionaires doubles by 2025
According to an estimate, the number of millionaires in the People’s Republic will double in the next five years. By 2025, the number of private individuals with investable assets of at least ¥10 million (around $1.5 million) will rise from more than two million to fivemillion. This is reported by the news service Bloomberg and refers to a forecast by the major bank HSBC. According to the report, the middle class will also grow from around 340 million to 500 million people during this period.
Household wealth is expected to increase by about 8.5 percent every year for the next five years, according to the outlook. Investable assets are expected to reach about ¥300 trillion in 2025. HSBC economists led by Qu Hongbin see this as an advantage for foreign companies: “A rising middle class will also increase imports of goods and services andattract foreign companies to invest in China.”
However, HSBC experts warn that as wealth increases the gap between rich and poor also widens. This is because the richest one percent of households have around 30 percent of China’s wealth. In their forecast, the economists call for further efforts to reduce income inequality. ari
Finance
Inequality
Society
Beijing is growing and getting older
China’s capital continues to experience a significant influx. As reported by the Xinhua news agency, Beijing currently has 21.9 million inhabitants. 2.3 million more people than ten years ago. The increase by almost a tenth does not fit in with the government’s plans: After the city had grown from six million to more than 15 million inhabitants since the mid-1980s, the administration tried to change course. Migrant workers were made aware that they were no longer welcome. For example, the authorities deliberately demolished neighborhoods where many of the migrant workers lived. In addition, special economic zones were set up around the capital to further relieve the metropolis. But Beijing is not only getting bigger, but it is also getting older. The capital is aging even faster than the rest of the country, as figures show. One-fifth of Beijing’s population of regular residents (hukou) is now over 60 years old. fin
Beijing
Society
Rhenus Automotive opens production in Shenyang
The service providers follow the big manufacturers: Rhenus Automotive has opened a logistics center with finishing facilities for vehicle parts at the BMW site in Shenyang. There, the Holzwickede-based company plans to manufacture front and rear axles for the BMW plant in Dadong. Shenyang is Rhenus Automotive’s first location in China. According to the company, the plant uses numerous concepts for the digitalization of industry (Industry 4.0). Rhenus is taking care of the procurement of all individual parts for the production itself. In addition to the logistics center with final production, Rhenus also opened an Asian holding company in Shanghai. The company is anticipating a further increase in car sales: “The current market entry was deliberately chosen because we expect a great deal of momentum in the next few years,” says Marcus Ewig, Managing Director of Rhenus. fin
Car Industry
Opinion
Dialogue on the precipice
By Christian Straube
Dialogue with China is characterized by more facets than a conference with political decision-makers for invited guests in Beijing. It also involves more than the public exchange of statements between politicians from China and Europe. This visible dialogue of “high politics” seems just as dispensable as the need to travel to China.
The development of dialogue between civil society organizations over the last ten years has shown that the opportunity for exchange is clearly dwindling. New rules and laws in China stifle dialogue with bureaucratic red tape and authoritarian surveillance. At the same time, however, the encounters between the two sides also show that substantive priorities are often set similarly and that there is an interest in continuing cooperation on topics such as decarbonization and sustainability.
Particularly due to the more restrictive policies under Xi Jinping, the need for China expertise is increasing. The need for dialogue with civil society organizations plays a central role here, also with a view to the New Silk Roads. After all, it is civil society that experienced and helped shape the country’s economic development. Civil society organizations know the underlying Chinese structures of, for example, the social impacts of large-scale projects, the export of fossil energy production, or urban development in BRI countries. More projects are needed that open up spaces for dialogue between Chinese and, for example, Southeast Asian environmental organizations.
Increasing pressure – also due to polarization
However, both the increasingly restrictive structures in China and the polarized debate in Germany are putting more and more pressure on me and my work as a dialogue creator. The impression often arises that “dialogue” in itself already stands for active collaboration with and passive external control by the Chinese Communist Party. The debate in Germany deprives me of the language in my work as a communicator for civil society exchange.
An example is the Director of the GPPi, who has no background in regional studies himself, but who helps to shape the China discourse in Germany in frequently provocative opinion pieces. Would this even be possible with regard to our neighbor France, for example? Probably not. It is more effective to orient oneself toward those people with China competence from education, science, and civil society who deal with stays in China and its framework conditions in their practical work on a daily basis.
On the other hand, the legal structures in China eat up the interstices necessary for my work. It is an illusion to assume that there is a “flawless” dialogue with China. The initial political situation, as well as the expansion of party structures in state and society only open up channels with official participation for civil society dialogue. These are mostly organizations and security agencies initiated by the Communist Party or the state.
The pandemic currently makes dialogue on the ground impossible. Digital alternatives no longer allow for nuances. The dialogue here is no more than an exchange of views. The shift to the digital space makes it clear to all who work with China how much face-to-face conversation on the margins of conferences, workshops, and dialogue mechanisms is missing.
‘Talking to China’ instead of ‘talking about China’
With all these difficulties, should the conclusion be not to travel to China in the future? No. Itwould be the end of my work as a communicator between the two sides. The crux of the matter is rather how much space and influence official involvement takes up in the respective cooperation and how much space to work in accordance with one’s own values remains. This consideration is not new; it has been with me since I studied sinology. My experience also shows that many people in China are involved in a wide variety of civil society initiatives. Traveling to China thus means showing interest in their courage and arousing curiosity in their counterparts about their own work and perspectives.
Ultimately, traveling to China is also about showing resistance to state-enforced Chinese exceptionalism and the monolithic representation of China in discourse. However, this can only be achieved if we “talk to China” and not if we fall back into “talking about China”. Only in dialogue is it possible to counter the discourses about the other, both in Germany and in China, with something concrete. Finally, it should be noted that for my work, trips to China and encounters on the ground are indispensable. Only these encounters lead to shared knowledge and new answers to the global challenges of today.
Dr. Christian Straube is Program Manager in the China Program of Stiftung Asienhaus in Cologne. He studied Sinology, Economics, and South Asian Political Science at the University of Heidelberg and Tsinghua University in Beijing. He then did research for the Max Planck Institute for Ethnological Research in Zambia and completed his doctorate at the University of Halle-Wittenberg. Here at China.Table he expresses a personal opinion.
Chinese Communist Party
Geopolitics
Executive Moves
Translation missing.
Dessert
The Xiaoman time of the year (小滿) has arrived, the time of the “lesser fullness of grain.” In the traditional Chinese calendar, it marks the beginning of the main agricultural season. It lasts until June 5 – and China’s farms are indeed very busy during this time.
Car manufacturers worldwide see electromobility as the future, which is why batteries are becoming a crucial component for the entire industry. It is, therefore, fitting that Germany is currently evolving into an extremely popular location for battery production. Two Chinese manufacturers have chosen Germany as an investment location. After CATL in Thuringia, SVOLT now wants to produce EV batteries in Saarland. Marcel Grzanna analyses what Germany – and Saarland in particular – has to offer the large Chinese manufacturer.
That China and Germany can go well together in the field of e-mobility is also shown by the news that Daimler Truck AG and battery manufacturer CATL are further expanding their cooperation. Initially, CATL is to supply the lithium-ion batteries for the all-electric Mercedes-Benz eActros LongHaul. But both companies agreed on a much more far-reaching cooperation.
Meanwhile, our Feature on the financial situation ofChinesefootball shows what is possible in China when the president wishes for something. Billions have been invested, players and coaches from all over the world have been lured to the People’s Republic, and entire clubs have been bought – money is not an issue. A wild hustle and bustle developed around Chinese football, in which a goal sometimes costs a measly €10 million. But at the start of the new season, the results are disastrous. Even the reigning champions no longer exist. Now China’s rulers are intervening.
A truly terrible report reached us from Gansu. There, 21 runners lost their lives during an ultra marathon. Shortly after the start, the participants were surprised by a violent drop in temperature, hail, freezing rain, and strong winds. On Monday, authorities launched an investigation. The accusation: The organizers allegedly ignored warnings about the change in weather.
Hard to believe, but Germany is slowly but surely turning into a popular location for battery production for EVs. Daimler has started manufacturing its own high-performance battery systems at its traditional Hedelfingen plant, Volkswagen is investing in the production of future-proof solid-state batteries in Salzgitter, Porsche wants to build a battery factory for high-performance cells in Tuebingen, and Opel parent Stellantis plans to produce in Kaiserslautern in the future.
For no less than two Chinese companies, the prospect of local self-sufficiency for German carmakers is apparently no obstacle to realizing big plans in this country. After CATL in Thuringia, another major producer from the People’s Republic, SVOLT in Saarland, wants to invest billions in its expansion in Europe. There is talk of up to €2 billion in Saarland, while CATL is expected to invest around €1.8 billion. “We see some very innovative companies in Europe, but we don‘t see them as competitors; we see them as market companions,” says SVOLT’s Head of Europe Kai-Uwe Wollenhaupt in an interview with China.Table. “Healthy competition is important to drive innovation in range, fast-charging capability, sustainability and safety.”
But competition is also why the price of batteries is falling continuously. A few years ago, car manufacturers were still paying several hundred euros per kilowatt-hour of power; today it is only around €100. The trend: a continued fall. “We assume that in 2025 there will be cost parity between the conventional combustion engine and battery EVs without carbon emissions – at €65 per kilowatt-hour,” says Wollenhaupt. That sounds like a declaration of war for an already fiercely competitive market.
Price war for batteries drives EV demand
But does such a huge investment make sense in the face of falling prices and increasing competition? Or is it really an incalculable risk for the companies? No, says Wollenhaupt. Because the calculation looks different: Falling prices for the kilowatt-hour will further increase demand for EVs because they will in turn become cheaper for consumers. The battery manufacturers will then generate the necessary sales through the masses. Wollenhaupt is certain: “The demand from the automotive industry in the coming years will be enormous. Batteries from SVOLT alone will not succeed in meeting this demand.” Annual production capacities of 24 gigawatt-hours are to be created at two sites in Ueberherrn and in Heusweiler, 30 kilometers away. Up to 500,000 EVs could be equipped with them.
The Saarland is glad to have landed a big fish with the Chinese company. Dozens of other locations on the continent had been examined by the Chinese for the cell factory, on the one hand, and the pack and module production on the other. Among other things, the geographical location with the proximity to France, where the Stellantis brands Citröen and Peugeot are based, spoke in favor of the Saarland. Lavish subsidies are probably another reason.
Competitor CATL collects €13.5 million for its commitment from the state of Thuringia alone. According to the Saarland Ministry of Economics, the amount of the subsidies for SVOLT has allegedly not yet been finally decided. What is clear, however, is that SVOLT will benefit from GRW funding for structurally weak regions, among other things. The subsidy is linked to legally binding conditions for the creation and safeguarding of permanent jobs. In the Saarland, up to 2000 jobs are to be created. In addition, the company can expect possible taxbreaks and good conditions for building loans and for the purchase or lease of land.
Millions in subsidies and aid
Here, too, the company benefits from the concession of the Saarland state government, whose Strukturholding Saar bought the land for use by SVOLT to save the investor time and effort. It is apparently still unclear whether SVOLT will later act as buyer or leaseholder of the building land. “Currently, the various agreements for the further concretization of the project or the contractual arrangement are in coordination,” explains a ministry spokesman. The corresponding model will be developed, taking into account all obligations and framework conditions resulting from the subsidy guidelines, state aid, and competition law, as well as the requirements of the investors.
Funding, geographical location, and relative proximity to the headquarters of numerous European carmakers would perhaps be reason enough to invest on German soil. Companies in all sectors also like to take up the argument of short distances to reduce emissions. But this is only a pleasant side effect of strategic considerations. Chinese companies also need to take precautions should the trade dispute escalate further and exports from China to Europe become more difficult – they need to secure supply chains and become more regionally flexible, too.
“One of the biggest plus points of Germany as a location is the good level of education of the available workforce,” says Bernard Bäker, Professor of Automotive Mechatronics at TU Dresden. The Chinese have good expertise in cell chemistry, but “if you’re producing in high volumes, you need above all a special reputation for production technology that leaves little margin for error.” Here, he says, the Germans are still clearly superior to the Chinese. Acceptable component tolerances in the production batches of the cells are “extremely important.” The researchers note production-related differences in cell capacities of several percent. One of the decisive factors is the quality of the electrodes used, which influences the load capacity of the cells and thus their quality over the operating time.
Wollenhaupt can confirm this in practice. “To produce a good battery cell, around 3,500 different parameters have to be taken into account, which is why highly qualified employees and high efficiency are extremely important,” says the SVOLT European head. Researcher Bäker considers the production of batteries to be at least as complicated as the construction of microchips. SVOLT’s success in Saarland is thus likely to be measured internally by the so-called reject rate, precisely the quantity of batteries that do not reach optimum quality due to errors in production and later have to be sold at a lower price. The manufacturers of EVs are given preferential treatment because their motors have to be powered by top batteries due to the high load. Electric lawnmowers or electric boats, on the other hand, which are used much less than cars, can be equipped with less resilient batteries.
Batteries
Car Industry
Electromobility
Kai-Uwe Wollenhaupt
Porsche
Football: big money time is over
Just imagine it: Borussia Dortmund becomes the German football champion – and shortly afterward is kicked out of the Bundesliga. Unimaginable? Not in China. There, Jiangsu Suning won the Chinese Super League title for the first time – and only a few weeks later, stopped playing. The news caused ripples even as far away as Europe, and fans were shocked. “I can’t believe it because we just won the league championship,” Jiangsu fan Lan Zihan told Reuters news agency. But Jiangsu Suning’s fate exemplifies the financial woes of Chinese professional football.
It was December 2015 when electrical retailer Suning took over the local football club at its Nanjing headquarters and renamed it Jiangsu Suning. The company subsequently poured a lot of money into the club. Stars such as Ramires (from Chelsea London) and Alex Teixeira were lured to China, and the Italian star coach Fabio Capello was also bought. The club wrote red numbers because of the high expenses. But with Suning behind them, money was suddenly no longer an issue.
And with the money came success: the eagerly awaited championship title. But the popping of champagne corks turned out to be the champion’s last thunderclap.
Several clubs are threatened with extinction
Tianjin is currently facing a similar threat. In the port city not far from Beijing, two clubs played in China’s top division for a long time. Soon there could be none. While the Tianjin Jinmen Tigers (formerly Tianjin Teda and ex-club of Bavarian striker Sandro Wagner) are still desperately looking for a new financial backer, Tianjin Tianhai had to declare bankruptcy and withdraw from the Super League due to excessive debts.
Yet this club was considered particularly ambitious. Shu Yuhui – a billionaire from the pharmaceutical industry – bought the club, renamed it Tianjin Quanjian after his company, and invested millions: As a coach, he hired the Italian world champion Fabio Canavarro, they paid €35 million for Anthony Modeste to 1. FC Cologne. The striker is now back on the Rhine and has to sit mostly on the bench. Club owner Shu, however, is doing even worse. He is in prison for fraud.
China’s football clubs are on the brink of financial ruin. The list could easily be continued, for example, with Shandong Luneng: The club was kicked out of the Asian Champions League because it had not paid salaries for months. But how could it have come to this?
The absurdity of the situation is best illustrated by Carlos Tévez. The Argentinian striker, who was almost 33 at the time, had been scoring goals for top European clubs such as Manchester United, Manchester City, and Juventus Turin, but his best days were long behind him. But China was in a frenzy – and so Shanghai Shenhua (owned by the real estate company Greenland Holdings) lured the kicker to the People’s Republic. Tévez was offered a salary of €40 million net. As astronomical as his salary was, however, as earthly was his performance: For Shanghai Shenhua, Tévez scored a whole four goals. In other words, each goal cost the club €10 million. And he did Chinese football a disservice, saying of his time in China, “They just can’t play football.” And, “I spent seven months on holiday there.”
In addition, a lot of money flowed abroad. Chinese entrepreneurs invested heavily in foreign clubs: Wang Jianlin (of Dalian Wanda) acquired shares in Atlético Madrid; the household appliance manufacturer Suning invested more than $300 million in Inter Milan. In addition to club stakes, vast sums have been invested in broadcasting rights, licensing, and sponsorship. In 2017 alone, China’s entrepreneurs invested around $2.5 billion in the global football business.
Abrupt end of the boom
But then two factors put an abrupt end to the hustle: the Covid crisis and the decision-makers in Beijing. The pandemic hit China’s companies massively. Suning’s profits alone fell 140 percent in 2020 compared to the previous year. Corporate headquarters had to decide where to cut money. And so corporations like Suning are applying the red pen to their involvement in the football business first and foremost. “The pandemic and subsequent recession, strained international relations and an increasing focus on the national economy have led to Chinese companies losing interest in football,” says Cameron Wilson. He has lived in Shanghai for many years and regularly reports on the scene there on the website Wildeastfootball. The entrepreneurs had not put their money into the clubs for the love of football. “The conglomerates were financing the football clubs as a way of showing they supported the government’s goals in Beijing.”
While the rulers in Beijing made it increasingly difficult for citizens to invest abroad, entrepreneurs took advantage of the euphoria decreed by President Xi to move their money abroad. This allowed them to boast that they owned prestigious football clubs abroad – while identifying themselves as obedient members of the Chinese Communist Party. The clubs bitterly felt this all-too-superficial calculation during the crisis.
But it wasn’t just the Covid pandemic, the decision-makers in Beijing also ensured that the big-money era had passed with new rules. “Chinese club spending is three times higher than in Japan, and ten times higher than in South Korea,” Chen Xuyuan, Chairman of the Chinese Football Association, noted in horror. “This money football is eating away at the health of our sport.”
‘Healthy and civilized’
As an antidote, a 100 percent tax was initially introduced on transfer fees for players from abroad. The aim was to encourage clubs to invest more in Chinese players and, consequently, to invest more in developing their own young talent. Subsequently, strict salary caps were introduced: A team’s salaries may no longer exceed ¥600 million (the equivalent of $92 million) per year. The foreign players in the team are not allowed to earn more than a combined total of $12 million.
And the entrepreneurs were also up in arms. “They don’t care about the community, they don’t develop the clubs either,” said Louis Liu, secretary general of the Chinese Football Association (CFA). To ensure that club names are also “healthy and civilized” in the future, company titles and logos were stripped out. The serial champion Guangzhou Evergrande (of the real estate group Evergrande Real Estate) became Guangzhou F.C.; Shanghai SIPG (Shanghai International Port Group) became Shanghai Port, and Dalian Shide (Shide Group) became Dalian Pro.
Both the transfer tax and the salary caps are important steps to move Chinese football forward. Absurd transfer fees for foreign players and astronomical salaries made headlines around the world but had little to do with sustainable development. The result of the wild hustle is devastating: Within a year, 16 Chinese football clubs went bankrupt. One thing is now clear: The era of big money in Chinese football is over. Ning Wang/Michael Radunski
Chinese Communist Party
Sports
News
Daimler and CATL intensify cooperation
Daimler Truck AG and Chinese battery manufacturer Contemporary Amperex Technology Co. Limited (CATL) intend to expand their cooperation. This was announced in a joint statement by the two companies. According to the statement, CATL will supply the lithium-ion batteries for the all-electric Mercedes-Benz eActros LongHaul. The model is scheduled to go into series production in 2024. With a range of 500 kilometers per battery charge, it is expected to enable all-electric freight transport even over longer distances. The batteries are said to feature a high energy density with a long service life. They should also be charged quickly.
The supply agreement between Daimler Truck and CATL extends beyond 2030. Together, they also want to develop advanced batteries for the next generation of truck applications. The focus is on high modularity and scalability, they say. It said the goal is to use batteries flexibly for different applications and e-truck models. “By expanding our strong partnership with CATL, we will significantly accelerate our electrification strategy and play a leading role in making the industry carbon neutral,” said Daimler Truck CEO Martin Daum. CATL CEO Robin Zeng also expressed his satisfaction. “We are delighted to have further developed our existing partnership with Daimler Truck AG around our shared vision for an electric future.” Zeng was convinced that Daimler Truck would gain further market share with the help of the new cooperation.
Daimler Truck and CATL signed a supply agreement for lithium-ion battery cell modules for electric production trucks in 2019. Current vehicles include the Mercedes-Benz eActros, the Freightliner Cascadia, and the Freightliner eM2. Starting in 2027, Daimler Truck plans to supplement its vehicle range with series-production vehicles with hydrogen-based fuel cell drivesystems. rad
Batteries
Car Industry
Electromobility
Mercedes Benz
Investigation after Gansu marathon deaths
After a sudden storm killed 21 people in a 100-kilometer race in Gansu province over the weekend, the race’s organizers are under pressure. Authorities launched an investigation on Monday.
The ultra-marathon race in Gansu went through rough terrain in Jingtai County (Gansu Province). However, the 172 extreme athletes experienced a severe change in weather about 20 to 30 kilometers after the start: The temperature dropped, hail, freezing rain, and strong winds came up. Some of the blankets included in the athlete’s equipment were simply blown away. State media reported that the dead included Liang Jing, the winner of previous races, and Huang Guanjun, a hearing-impaired runner who won the marathon at China’s 2019 National Paralympic Games.
Outdoor and running sports are also experiencing a significant upswing in China. As elsewhere in the world, organizers are offering increasingly extreme and exotic settings for the events. In Gansu, the route took runners through particularly rough terrain, which made the rescue more difficult. Drones with heat sensors had been used to track down missing people, state media said. They reported that only the first 24 kilometers of the run were passable by car.
On Monday, state media reported that provincial authorities set up an investigation team to look into the accident. Apparently, the organizers of the marathon ignored severe weather warnings issued by the early warning center of Baiyin city. The Gansu provincial weather center had warned in a report on Friday of “sudden heavy rain showers, hail, lightning, sudden squalls” and other adverse weather conditions across the province. fin
Sports
Storm
Number of millionaires doubles by 2025
According to an estimate, the number of millionaires in the People’s Republic will double in the next five years. By 2025, the number of private individuals with investable assets of at least ¥10 million (around $1.5 million) will rise from more than two million to fivemillion. This is reported by the news service Bloomberg and refers to a forecast by the major bank HSBC. According to the report, the middle class will also grow from around 340 million to 500 million people during this period.
Household wealth is expected to increase by about 8.5 percent every year for the next five years, according to the outlook. Investable assets are expected to reach about ¥300 trillion in 2025. HSBC economists led by Qu Hongbin see this as an advantage for foreign companies: “A rising middle class will also increase imports of goods and services andattract foreign companies to invest in China.”
However, HSBC experts warn that as wealth increases the gap between rich and poor also widens. This is because the richest one percent of households have around 30 percent of China’s wealth. In their forecast, the economists call for further efforts to reduce income inequality. ari
Finance
Inequality
Society
Beijing is growing and getting older
China’s capital continues to experience a significant influx. As reported by the Xinhua news agency, Beijing currently has 21.9 million inhabitants. 2.3 million more people than ten years ago. The increase by almost a tenth does not fit in with the government’s plans: After the city had grown from six million to more than 15 million inhabitants since the mid-1980s, the administration tried to change course. Migrant workers were made aware that they were no longer welcome. For example, the authorities deliberately demolished neighborhoods where many of the migrant workers lived. In addition, special economic zones were set up around the capital to further relieve the metropolis. But Beijing is not only getting bigger, but it is also getting older. The capital is aging even faster than the rest of the country, as figures show. One-fifth of Beijing’s population of regular residents (hukou) is now over 60 years old. fin
Beijing
Society
Rhenus Automotive opens production in Shenyang
The service providers follow the big manufacturers: Rhenus Automotive has opened a logistics center with finishing facilities for vehicle parts at the BMW site in Shenyang. There, the Holzwickede-based company plans to manufacture front and rear axles for the BMW plant in Dadong. Shenyang is Rhenus Automotive’s first location in China. According to the company, the plant uses numerous concepts for the digitalization of industry (Industry 4.0). Rhenus is taking care of the procurement of all individual parts for the production itself. In addition to the logistics center with final production, Rhenus also opened an Asian holding company in Shanghai. The company is anticipating a further increase in car sales: “The current market entry was deliberately chosen because we expect a great deal of momentum in the next few years,” says Marcus Ewig, Managing Director of Rhenus. fin
Car Industry
Opinion
Dialogue on the precipice
By Christian Straube
Dialogue with China is characterized by more facets than a conference with political decision-makers for invited guests in Beijing. It also involves more than the public exchange of statements between politicians from China and Europe. This visible dialogue of “high politics” seems just as dispensable as the need to travel to China.
The development of dialogue between civil society organizations over the last ten years has shown that the opportunity for exchange is clearly dwindling. New rules and laws in China stifle dialogue with bureaucratic red tape and authoritarian surveillance. At the same time, however, the encounters between the two sides also show that substantive priorities are often set similarly and that there is an interest in continuing cooperation on topics such as decarbonization and sustainability.
Particularly due to the more restrictive policies under Xi Jinping, the need for China expertise is increasing. The need for dialogue with civil society organizations plays a central role here, also with a view to the New Silk Roads. After all, it is civil society that experienced and helped shape the country’s economic development. Civil society organizations know the underlying Chinese structures of, for example, the social impacts of large-scale projects, the export of fossil energy production, or urban development in BRI countries. More projects are needed that open up spaces for dialogue between Chinese and, for example, Southeast Asian environmental organizations.
Increasing pressure – also due to polarization
However, both the increasingly restrictive structures in China and the polarized debate in Germany are putting more and more pressure on me and my work as a dialogue creator. The impression often arises that “dialogue” in itself already stands for active collaboration with and passive external control by the Chinese Communist Party. The debate in Germany deprives me of the language in my work as a communicator for civil society exchange.
An example is the Director of the GPPi, who has no background in regional studies himself, but who helps to shape the China discourse in Germany in frequently provocative opinion pieces. Would this even be possible with regard to our neighbor France, for example? Probably not. It is more effective to orient oneself toward those people with China competence from education, science, and civil society who deal with stays in China and its framework conditions in their practical work on a daily basis.
On the other hand, the legal structures in China eat up the interstices necessary for my work. It is an illusion to assume that there is a “flawless” dialogue with China. The initial political situation, as well as the expansion of party structures in state and society only open up channels with official participation for civil society dialogue. These are mostly organizations and security agencies initiated by the Communist Party or the state.
The pandemic currently makes dialogue on the ground impossible. Digital alternatives no longer allow for nuances. The dialogue here is no more than an exchange of views. The shift to the digital space makes it clear to all who work with China how much face-to-face conversation on the margins of conferences, workshops, and dialogue mechanisms is missing.
‘Talking to China’ instead of ‘talking about China’
With all these difficulties, should the conclusion be not to travel to China in the future? No. Itwould be the end of my work as a communicator between the two sides. The crux of the matter is rather how much space and influence official involvement takes up in the respective cooperation and how much space to work in accordance with one’s own values remains. This consideration is not new; it has been with me since I studied sinology. My experience also shows that many people in China are involved in a wide variety of civil society initiatives. Traveling to China thus means showing interest in their courage and arousing curiosity in their counterparts about their own work and perspectives.
Ultimately, traveling to China is also about showing resistance to state-enforced Chinese exceptionalism and the monolithic representation of China in discourse. However, this can only be achieved if we “talk to China” and not if we fall back into “talking about China”. Only in dialogue is it possible to counter the discourses about the other, both in Germany and in China, with something concrete. Finally, it should be noted that for my work, trips to China and encounters on the ground are indispensable. Only these encounters lead to shared knowledge and new answers to the global challenges of today.
Dr. Christian Straube is Program Manager in the China Program of Stiftung Asienhaus in Cologne. He studied Sinology, Economics, and South Asian Political Science at the University of Heidelberg and Tsinghua University in Beijing. He then did research for the Max Planck Institute for Ethnological Research in Zambia and completed his doctorate at the University of Halle-Wittenberg. Here at China.Table he expresses a personal opinion.
Chinese Communist Party
Geopolitics
Executive Moves
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Dessert
The Xiaoman time of the year (小滿) has arrived, the time of the “lesser fullness of grain.” In the traditional Chinese calendar, it marks the beginning of the main agricultural season. It lasts until June 5 – and China’s farms are indeed very busy during this time.
