Beijing’s iron grip ruins listing on U.S. stock market + The different truth behind political polls
A diet for data hunger
The different truth behind political polls
VDMA: Germany lost its championship title
Huawei secures patent deal with VW supplier
Boycott of Winter Games
EU: WTO to rule in patent disputes
EU Parliament: Sanctions without unanimity
Censorship triggers LGBTQ uproar
Portrait: Xia Xu-Fee – Consultant, a dream job
Persons of interest: Andreas Gorbach new head of Daimler Trucks China
Dear reader,
German is no longer good enough for us. If you would like to make China.Table accessible to people who prefer to read our articles in English, we now have something in store for you. From now on, our briefings will also be published in English. For the international version of China.Table, please contact my colleague Robert Hackenfort.
China’s authorities are pushing forward its data protection offensive and are threatening companies with punishments should they not comply with new regulations. Does China finally value personal data? According to Frank Sieren, this is partly true, but unfortunately not the entire truth. Chinese authorities still have free access to all the data they would normally have to obtain through the back door in the US and EU. The strict enforcement of these new rules also serves as a reminder for tech companies who is in charge. But at the same time, corporations are no longer able do whatever they please with their customers’ data. That’s definitely progress.
Journalists who report from China know the problem: its citizens are very, very cautious when talking to strangers. Many people probably inherited this uneasy feeling about public expressions of opinions from their parents when they were younger. Marcel Grzanna investigated what impact this has on opinion polling in China. Surveys that aim to capture political trends in China are therefore difficult to conduct and even more difficult to interpret. This is especially true regarding the high approval ratings for the CP.
China’s government intends to impose stricter controls on Chinese companies planning to go public abroad in the future These new rules specifically target “data security, cross-border data flow and management of confidential information,” according to a document released by the State Council in Beijing on Wednesday. The new rules will regulate confidentiality and responsibility for the security of information for companies traded overseas. Supervision of such listed companies will be tightened in order “to deal with risks and emergencies,” the announcement claims.
The official concern is that data of private individuals could leak abroad. Foreign authorities could then force companies to give access to their growing amounts of data.
Furthermore, regulations for the admission of Chinese companies to IPOs abroad are to be revised. China’s securities regulator aims to close loopholes that Chinese tech giants have used in the past to go public in the US or Hong Kong via holding companies in tax havens such as the Cayman Islands or the British Virgin Islands, as reported by financial agency Bloomberg. From now Chinese companies will require permission from authorities.
The announcement follows just after Chinese ride-sharing service Didi Chuxing’s app was removed fromall app stores two days after its billion-dollar IPO in the US last Sunday (China.Table reported). The order came from China’s cybersecurity regulator. According to authorities, Beijing-headquartered Didi was deemed guilty of serious violations in its collection and use of personal data.
Didi has issues in its statement that it had already stopped registering new users as of July 3 and would change its privacy rules as required by the state. No data has been leaked abroad, the company said, adding that users who have installed the app are still able to continue its use. This means normal business operations are continuing.
Top dog and monopolist
With over 493 million active users and a market share of around 80 percent in China, Didi has a virtual monopoly as a ride service provider. According to its own figures, the company conducts around 40 million rides a day.
Didi’s market capitalization is $67 billion. By comparison, U.S. competitor Uber, which Didi pushed out of the Chinese market in 2016 after a price battle, has a global market capitalization of 95 billion dollars. Last year, however, Didi’s revenue declined to 21.6 billion dollars due to the Covid pandemic, which makes it a loss of about 1.6 billion.
The state newspaper Global Times exposes the state’s position in an editorial. China cannot allow a company like Didi, whose largest shareholders are based abroad, to operate “a super database that has more access to personal data than the Chinese government”.
Didi’s best-known major shareholders include electronics giant Apple, which has held a seat on the board since 2016, Japanese tech investor Softbank with a 21.5 percent stake, and Chinese tech giant Tencent with a 6,8 percent stake.
Beijing Foreign Ministry spokesman Wang Wenbin’s main concern in this regard was that the US might try to gain hold of Chinese data. “In the past, the USA has forced companies to install backdoors and obtained user data,” Wang criticized, accusing the United States of data theft and privacy violations. He further stated that the US was the “biggest threat to global cybersecurity”.
Despite political tensions between Washington and Beijing, the number of Chinese companies listed in the US has grown by 14 percent in the past seven months alone, according to South China Morning Post. China accounted for a third of all IPO proceeds worldwide in the first half of the year – more than any other country. About 250 companies are listed in the US.
More companies in their sight
Didi is not the only company that has come under scrutiny by the authorities. The online job platform Boss Zhipin is also under investigation. The same fate befell the truck booking apps of Yunmanman and Houchebang, which operate together under the names Full Truck Alliance and Manbang Group, respectively.
Full Truck Alliance has been criticized for hurting its drivers’ interests and among other things, maintaining a monopoly on freight data. In a statement on Monday, Full Truck Alliance stated it would “fully cooperate” with the authorities’ review and would also conduct an internal investigation. “Other than a suspension of new user registration, our applications will maintain normal operations,” the company said. Still, shares have plunged by ten percent.
Boss Zhipin is a recruitment app for small and medium-sized businesses. Kanzhun Ltd, the owner of the app, was listed on Nasdaq on June 11 and has since seen great success with their share price – although Boss Zhipin has yet to make any profit.
The auditing of these companies will take at least 45 business days under Chinese law. Back on April 29, other tech companies had been cited for a meeting by China’s competition regulator SAMR, cyberspace administration and tax authority. All companies were ordered to conduct a self-inspection within one month (China.Table reported). In May, China’s antitrust regulator also ordered Didi Chuxing, Meituan and eight other leading on-demand delivery and transportation companies to stop practices such as arbitrary price hikes or unfair treatment of drivers. Drivers only receive about 79 percent of all fees.
Increased data protection with backdoor access.
In their latest move, authorities refer to the National Security Law and the Cybersecurity Law, which are intended to prevent unauthorized access and excessive data collection. It is hard to tell at this point whether this is a power struggle between the state and private companies, which only were able to grow in power because the state has protected their markets, or the state is under pressure to actually take a growing awareness of data protectionamong the population into account.
A 2019 study by the Beijing-based Nandu Personal Information Protection Research Centre conductedon this topic, revealed that 30 percent of respondents had already been victims of data misuse, for example, having their phone numbers, addresses and bank details shared or sold without their knowledge. With the increased growth of online commerce during the Covid epidemic, concerns have grown even further. In this respect, these new political measures are likely to meet with approval among non-shareholders in the population.
However, the timing of this intervention is questionable. The Business models of accused companies were already known long before the IPO. It is striking that data protection is not a matter of equal rights for all. The Chinese government still reserves the right to collect data it deems important for the maintenance of public security. And public security in China is a broad term that can be interpreted differently depending on the situation.
A great amount of data and figures draw a clear picture of the People’s Republic of China: the second largest economy, largest EU trading partner and largest CO2 emitter. But there are also figures that should be treated with caution. Results of political polls in China among these. Unlike economic parameters, they are based on opinions and perception rather than facts.
A few days ago, China.Table author Stefan Baron had argued, based on figures from the 2020 Edelmann Trust Barometer and the results of a long-term study by the Ash Center at Harvard University’s Kennedy School, that the Chinese Communist Party, as a sole and authoritarian ruling organization, had earned a high degree of legitimacy among the country’s population
This portrayal comes not without a share of contradictions. Political scientist and China critic Andreas Fulda reminded people via Twitter of the problems inherent in social science datasets of an authoritarian government and therefore warned against giving them too much credit. “In China’s highly politicized state and society, citizens know the risks of speaking truthfully,”wrote the political scientist from the University of Nottingham.
Humanities generally have the problem that their data sets create fewer facts compared to other sciences because they leave more room for interpretation than, for example, customs statistics on a country’s exports. In China, the implications of an authoritarian government system add to the difficulty. On one hand, the regime’s strategy is to offload corruption and abuse of power onto the lower levels of government in order to be perceived as a beacon in the struggle for the welfare of its citizens. Yet the families of the country’s most powerful men are among the richest families in the country.
On the other hand, participants in polls in liberal societies do not have to fear any repercussion of political statements because they are covered by freedom of expression. Citizens in dictatorships, on the other hand, instinctively express themselves much more cautiously. When a stranger approaches them and immediately asks sensitive political questions, experience admonishes people in dictatorships to express themselves as inconspicuously as possible and, above all, in a non-confrontational manner. Why should they trust a foreign face who asks questions that can get you into trouble with the wrong answers?
Caution lies in the DNA
Correspondents who travel extensively to China on journalistic assignments and talk to people from all walks of life are all too familiar with this phenomenon. It often takes hours of intense conversation to gain people’s trust. Those who persistently keep their eyes on the price discover that, beneath the surface, many differentiated opinions come to light. Contrary to the common belief that Chinese people have no political opinion of their own because state propaganda prevents them from thinking, China’s citizens are very much capable of critically assessing the circumstances under which they are governed. They do not do so naively, however, but with the necessary caution that they developed in their mother’s womb during 75 years of dictatorship.
“Locals often tend to distort sociopolitical realities and conceal what they consider negative and undesirable information that would paint a negative picture of their country,” Ariel Ahram and Paul Goode concluded in 2016 in their influential study, “Researching Authoritarianism in the Discipline of Democracy.” Government officials are apparently more guided by a dictated line when formulating their answers. In her article “The Boundaries of Research in an Authoritarian State” published in the International Journal of Qualitative Methods, social scientist Saltanat Janenova writes: “In the nondemocratic context, government officials arereluctant to share their views openly and tend to talk withinthe “scripts” of state propaganda.”
In the specific case of the Harvard study to which author Baron refers in his opinion piece, 93 percent of respondents attest to their satisfaction with the Chinese central government. This is an astonishingly high amount any democratic government wouldn’t even dare dream of. The only question is whether it can be trusted under the given conditions. Political scientist Fulda accuses Baron of trying to preempt any criticism of the study by pointing out that 31,000 face-to-face interviews were conducted for research purposes. The university commissioned a Chinese company for this purpose, which itself describes as reputable. But here it is important to bear in mind that companies, especially Chinese ones, that aim to measure the political climate in the country are walking on thin ice.
Satisfaction rate puts itself in perspective
If you wish to interview 31,000 people in the People’s Republic, you can’t do so without authorities at the local levels taking notice. So the survey had to be announced and approved. The addiction to control of an authoritarian government means that it wishes to influence scientific freedom. Inconvenient questions are unceremoniously deleted or changed. Press conferences with officials of the Communist Party have operated on exactly this principle for years. And who can guarantee the respondents of the survey that their answers will remain anonymous? Neither the Chinese company commissioned for the survey nor, especially, the powers that be at Harvard University. When Chinese authorities want to know which citizens gave which answers, they will find out. This is certainly no secret to respondents, who are well aware that nothing remains hidden from an inquisitive government. In this mixed situation, a satisfaction rate of 93 percent is put into perspective.
Irena Schneider of the University of Cambridge raises another concern. In her paper “Can we trust Measures of Political Trust?” she addresses the different conceptualizations of the terms when it comes to questions about “political trust,” for example. “Precisely because of the normative and subjective content of political trust, what constitutes a trustworthy institution is unlikely to be the same for citizens in different cultural and regime contexts.” In plain English: citizens living in democracies define political trust quite differently than people under dictatorships.
While it is a legitimate question in both states, comparing these figures does not necessarily tell us anything about whether or not a government enjoys legitimacy among the population. Especially since weak satisfaction rates in democracies by no means deprive a government of legitimacy.
Domestic policy of the CP China
Science
Society
News
VDMA: Germany lost its championship title
Germany’s mechanical engineering companies have lost their title as world export champion to China, according to their own calculations. An initial estimate by the German Engineering Federation (VDMA) for last year shows that the Chinese share of international sales was 15,8 percent, while German mechanical engineering exports accounted for 15,5 percent of the trade volume.
Before the pandemic, German mechanical engineering companies still had a lead of around 1,4 percentage points over their competitors from the Far East; in 2010, this figure was as high as seven percentage points. “The Covid pandemic, in particular, gave China’s rise a strong boost, because the country was affected very early and only very briefly, while European markets suffered a strong damper as a result of the pandemic,” said the VDMA’s head of foreign trade, Ulrich Ackermann, in a statement. “A strong economic recovery within the EU could ensure that machinery exports from Germany and other European countries will grow again in 2021. However, the long-term trend clearly favors China.
China has been the largest producer of machinery and equipment for quite a while now – and “by a long shot,” Ackermann emphasizes. The People’s Republic even produces as much as the USA, Germany, Japan and Italy combined. “It was only a matter of time before China also took the lead in foreign trade in machinery,” said Ackermann.
Nevertheless, the head of the association continues to see opportunities for German manufacturers – even in the People’s Republic. For example, there is a “noticeable backlog” in China in the field of industrial robotics, which promises export opportunities. According to a survey of 222 member companies, around 36 percent of machinery and plant manufacturers from Germany and Switzerland expect the Chinese strategy “Made in China 2025” to be positive for their own business. flee
Coronavirus
Export
Health
Industry
Mechanical Engineering
Trade
VDMA
Huawei secures patent deal with VW supplier
Huawei aims to make money with patent licenses for Volkswagen’s connected cars. The Chinese manufacturer of telecommunications equipment and hardware announced a licensing agreement with a Volkswagen Group supplier on Wednesday. The deal involves patents needed for LTE data radio technology (4G). The deal represents Huawei’s largest licensing agreement in the automotive sector to date, a Huawei spokesman said.
Licensing has become an important business model for Huawei ever since the Shenzhen-based company has considerably lost significance on the international smartphone market due to US sanctions. Huawei has also faced setbacks in its 5G expansion due to geopolitical reservations (China.Table reported). Back in April, Eric Xu, who has the periodic role as CEO of Huawei, said, “We see our role as enabling business partners in the automobile industry to advance into the field autonomous driving” (China.Table reported). Through its licensing agreements, Huawei plans to equip more than 30 million vehicles with its technology. niw
5G
Car Industry
Huawei
Technology
EU delegates call for boycott of Winter Games
The European Parliament advocates a diplomatic boycott of the Winter Olympics in Beijing. The EU Commission, the EU Council and member states must reject invitations from government representatives and diplomats to take part in the 2022 Winter Games, outlines the cross-party draft resolution, which MEPs will vote on Thursday. “Unless the Chinese government demonstrates a notable improvement in the human rights situation in Hong Kong, the Xinjiang Uighur region, Tibet, Inner Mongolia and elsewhere in China,” the draft says.
However, such a decision by the European Parliament would not be binding. Whether it will be heard by the member states remains an open question. According to media reports,Greek Prime Minister Kyriakos Mitsotakis already accepted an invitation to the Winter Games during a phone call with China’s President Xi Jinping on Wednesday.
According to the draft, MEPs will condemn the closure of Hong Kong newspaper Apple Daily and increase pressure on the European Commission to act on the situation in Hong Kong. The closure of Apple Daily and the arrests of journalists mark the definitive end of press freedom and freedom of expression in Hong Kong, the resolution says. The resolution also calls on the EU Commission and member states to put the National Security Law on every agenda of EU-China meetings, including diplomatic preparatory meetings. The EU must also “give back the voices lost to the people of Hong Kong” by helping to archive, publish and document human rights violations and by making books banned in Hong Kong available online.
According to the draft resolution, EU politicians also reiterate their position on the EU-China Investment Agreement (CAI): the agreement currently remains on hold. The Parliament even goes one step further and calls for additional sanctions against China for human rights violations in Hong Kong and Xinjiang. The result of the vote is expected on Thursday. ari
EU
Hongkong
Human Rights
Sports
Xinjiang
EU: WTO to rule in patent disputes
The European Union is demanding information from China regarding several court rulings and thus new legal regulations on intellectual property (IP) in the telecommunications industry. The newly introduced practice in China prohibits foreign companies from using EU courts to enforce disputes over IP rights, as a spokeswoman for the EU Commission’s Directorate-General for Trade told China.Table. The EU is now asking the World Trade Organization to review a total of four Chinese court decisions. “These new laws threat companies, that decide to file complaints with courts outside of China, with fines of up to 130,000 Euros per day,” the EU trade directorate complained. The EU is now reviewing this new measure in detail to ensure China respects the rights of EU patent holders and its WTO commitments.
The verdicts in question have been made by Chinese courts in cases involving Conversant against Huawei, OPPO against Sharp, Xiaomi against InterDigital and Samsung against Ericsson. In the former, a court in the People’s Republic of 2020 issued a preliminary injunction against lawsuits, according to the EU Letter to the WTO. The decision prohibits European patent holders from relying on European court decisions when a disputed IP is at issue. In addition, a fine would then be imposed. “These decisions appear to reinterpret existing laws and regulations and have also led to new regulations being promulgated.” The EU’s request was made under the WTO’s TRIPS agreement, which governs trade-related aspects of intellectual property rights. Initially, the time frame in which China must respond to the request was unclear. ari
EU
Patents
Telecommunications
Trade
WTO
EU Parliament: Sanctions possible without unanimity
The European Parliament has called on the EU Council to drop the principle of unanimity for decisions on sanctions against human rights violations. Individual EU member states would no longer able to simply block decisions on punitive measures. Instead, decisions should be taken by a qualified majority, according to a resolution adopted by the Foreign Affairs Committee on Wednesday evening on the EU’s international sanctions mechanism in the field of human rights (EU Magnitsky Act).
Under this regime, which has been in effect since December 2020, sanctions against four officials and one organization in Xinjiang were enacted at the end of March. The EU Parliament also called for corruption to be included within the scope of the sanctions regime since the EU Magnitsky Act currently does not list it as a punishable offence in conjunction with human rights violations. ari
EU
Human Rights
Sanctions
Xinjiang
Censorship triggers LGBTQ uproar
WeChat, the most widely used social media app in China, allegedly has blocked several online accounts of LGBTQ activism groups. All posts from groups such as Huazong University of Technology’s “Gay Pride” and Peking University’s “ColorsWorld” could no longer be accessed. In its place, a notification appeared: “all content has been blocked and account use has been stopped.” According to a short statement, Wechat had received “relevant complaints” about the pages. Account names of the groups were changed to “Untitled Account.” The feminist student group “Zhihe Society” of Fudan University in Shanghai also stated its official WeChat account had been deleted. “It is very clear that there is no way Zhihe’s original account can be retrieved in the short term,” the organization said.
Chinese online networks have repeatedly censored LGBTQ-related content on social media platforms and video streaming apps, even though China’s leadership decriminalized homosexuality back in 1997. But authorities apparently continue to deem posts with same-sex content as undesirable.
These recent bans caused outrage in online communities, with some users calling for online protests and renaming their profiles “Unnamed Account” in solidarity with LGBTQ groups. However, these calls for protest were also deleted a short time later. flee
Society
Technology
WeChat
Portrait
Xia Xu-Fees – Consultant, a dream job
Xia Xu-Fees, Business Consultant and Managing Director of China Business Upgrade
It was her father who sparked Xia Xu-Fees’ interest in Germany. He had studied mechanical engineering and would always tell her that Germany was number one in this field. His daughter’s mentality seemed rather German to him – so straightforward and direct. He was probably right about that, Xu-Fees says with a laugh: “I just say what I think.”
Dealing with different mentalities is an essential aspect of Xu-Fee’s everyday work. Four years ago, she founded ‘China Business Upgrade’, a consulting company that specializes in preparing German companies for business relations in China – and vice versa. She supports companies on the search for business partners and the establishment of locations in China and Germany, as well as the founding of companies and the optimization of businesses. Her main field is business development and strategy. Sometimes she has to do some convincing first: just because you successfully built up a company in Germany does not automatically a good employer in China – the working cultures of the two countries differ too greatly
Xu-Fees was born in Dalian, a port city in northeastern China. Following the advice of her father, who has since passed away, she first studied German and later International Economics and Trade while working. After working for an import-export company for several years, she came to Germany in 2001 and completed her MBA at the TH Nuremberg. She then worked for the Franconian tool manufacturerEmuge – after only two years she was responsible for setting up a subsidiary in Suzhou. This was followed by further positions in Germany and China, including Business Development Manager at the Zhongde Metal Group, which supports German and Chinese companies entering the market in the other country.
Medium-sized companies account for 35 percent of total sales in China
In 2017, Xu-Fees founded her own business, China Business Upgrade. “Consulting has always been my dream job,” she says. As a one-woman business, she mainly advises small and medium-sized companies in the fields of mechanical engineering, tool manufacturing, plant engineering and automation. In addition to her consulting work, she holds guest lectures and talks at the TH Nuremberg and offers coaching and training for companies.
Covid has put a “dent” in her self-employment, but she feels that things are now clearly looking up again for her clients. Global political tensions over China only played a minor role for mid-sized companies she counsels. “Many companies generate about 35 percent of their total sales in China. These companies cannot ignore China.”
Xu-Fees lives with her daughter and husband in a small town near Nuremberg. Until the outbreak of the pandemic, she traveled to China regularly, both professionally and privately. She is quite certain what she will do first as soon as she is able to return to China: “I want to visit my mother and eat her dishes.” Her favorite food: Diguawan – deep-fried sweet potato balls. Sarah Schaefer
Industry
Mechanical Engineering
Persons of interest
Andreas Gorbach is taking on new responsibilities at Daimler Truck AG as a new member of the Board of Management and Head of Development. His new tasks include procurement and Daimler Trucks China, plus the newly created Truck Technology Group as the central unit for powertrain, vehicle software, electrics/electronics and global purchasing. He previously held the position of CEO of Cellcentric, a joint venture between Daimler Truck and the Volvo Group.
His predecessor Sven Ennerst will continue to oversee the start of production of Mercedes-Benz trucks in China until the end of 2021. He then plans to retire after more than 30 years at Daimler.
Martin Kollmann is celebrating 25 years at Bremen-based freight forwarding service Karl Gross. Since 2000, he supervised the company’s business in China and moved his permanent residence to Shanghai at the end of 2003. He has been a member of the executive board of the Karl Gross Group since 2010.
Car Industry
Dessert
For thousands of years, the Emperor’s Canal was China’s most important artery. Today, it is hardly in use for the transport of goods. For this reason, more and more municipalities are turning the banks along the canal into recreational- and amusement parks. Illustrated: the waterfront promenade of the city of Cangzhou in the province of Hebei.
Persons of interest: Andreas Gorbach new head of Daimler Trucks China
Dear reader,
German is no longer good enough for us. If you would like to make China.Table accessible to people who prefer to read our articles in English, we now have something in store for you. From now on, our briefings will also be published in English. For the international version of China.Table, please contact my colleague Robert Hackenfort.
China’s authorities are pushing forward its data protection offensive and are threatening companies with punishments should they not comply with new regulations. Does China finally value personal data? According to Frank Sieren, this is partly true, but unfortunately not the entire truth. Chinese authorities still have free access to all the data they would normally have to obtain through the back door in the US and EU. The strict enforcement of these new rules also serves as a reminder for tech companies who is in charge. But at the same time, corporations are no longer able do whatever they please with their customers’ data. That’s definitely progress.
Journalists who report from China know the problem: its citizens are very, very cautious when talking to strangers. Many people probably inherited this uneasy feeling about public expressions of opinions from their parents when they were younger. Marcel Grzanna investigated what impact this has on opinion polling in China. Surveys that aim to capture political trends in China are therefore difficult to conduct and even more difficult to interpret. This is especially true regarding the high approval ratings for the CP.
China’s government intends to impose stricter controls on Chinese companies planning to go public abroad in the future These new rules specifically target “data security, cross-border data flow and management of confidential information,” according to a document released by the State Council in Beijing on Wednesday. The new rules will regulate confidentiality and responsibility for the security of information for companies traded overseas. Supervision of such listed companies will be tightened in order “to deal with risks and emergencies,” the announcement claims.
The official concern is that data of private individuals could leak abroad. Foreign authorities could then force companies to give access to their growing amounts of data.
Furthermore, regulations for the admission of Chinese companies to IPOs abroad are to be revised. China’s securities regulator aims to close loopholes that Chinese tech giants have used in the past to go public in the US or Hong Kong via holding companies in tax havens such as the Cayman Islands or the British Virgin Islands, as reported by financial agency Bloomberg. From now Chinese companies will require permission from authorities.
The announcement follows just after Chinese ride-sharing service Didi Chuxing’s app was removed fromall app stores two days after its billion-dollar IPO in the US last Sunday (China.Table reported). The order came from China’s cybersecurity regulator. According to authorities, Beijing-headquartered Didi was deemed guilty of serious violations in its collection and use of personal data.
Didi has issues in its statement that it had already stopped registering new users as of July 3 and would change its privacy rules as required by the state. No data has been leaked abroad, the company said, adding that users who have installed the app are still able to continue its use. This means normal business operations are continuing.
Top dog and monopolist
With over 493 million active users and a market share of around 80 percent in China, Didi has a virtual monopoly as a ride service provider. According to its own figures, the company conducts around 40 million rides a day.
Didi’s market capitalization is $67 billion. By comparison, U.S. competitor Uber, which Didi pushed out of the Chinese market in 2016 after a price battle, has a global market capitalization of 95 billion dollars. Last year, however, Didi’s revenue declined to 21.6 billion dollars due to the Covid pandemic, which makes it a loss of about 1.6 billion.
The state newspaper Global Times exposes the state’s position in an editorial. China cannot allow a company like Didi, whose largest shareholders are based abroad, to operate “a super database that has more access to personal data than the Chinese government”.
Didi’s best-known major shareholders include electronics giant Apple, which has held a seat on the board since 2016, Japanese tech investor Softbank with a 21.5 percent stake, and Chinese tech giant Tencent with a 6,8 percent stake.
Beijing Foreign Ministry spokesman Wang Wenbin’s main concern in this regard was that the US might try to gain hold of Chinese data. “In the past, the USA has forced companies to install backdoors and obtained user data,” Wang criticized, accusing the United States of data theft and privacy violations. He further stated that the US was the “biggest threat to global cybersecurity”.
Despite political tensions between Washington and Beijing, the number of Chinese companies listed in the US has grown by 14 percent in the past seven months alone, according to South China Morning Post. China accounted for a third of all IPO proceeds worldwide in the first half of the year – more than any other country. About 250 companies are listed in the US.
More companies in their sight
Didi is not the only company that has come under scrutiny by the authorities. The online job platform Boss Zhipin is also under investigation. The same fate befell the truck booking apps of Yunmanman and Houchebang, which operate together under the names Full Truck Alliance and Manbang Group, respectively.
Full Truck Alliance has been criticized for hurting its drivers’ interests and among other things, maintaining a monopoly on freight data. In a statement on Monday, Full Truck Alliance stated it would “fully cooperate” with the authorities’ review and would also conduct an internal investigation. “Other than a suspension of new user registration, our applications will maintain normal operations,” the company said. Still, shares have plunged by ten percent.
Boss Zhipin is a recruitment app for small and medium-sized businesses. Kanzhun Ltd, the owner of the app, was listed on Nasdaq on June 11 and has since seen great success with their share price – although Boss Zhipin has yet to make any profit.
The auditing of these companies will take at least 45 business days under Chinese law. Back on April 29, other tech companies had been cited for a meeting by China’s competition regulator SAMR, cyberspace administration and tax authority. All companies were ordered to conduct a self-inspection within one month (China.Table reported). In May, China’s antitrust regulator also ordered Didi Chuxing, Meituan and eight other leading on-demand delivery and transportation companies to stop practices such as arbitrary price hikes or unfair treatment of drivers. Drivers only receive about 79 percent of all fees.
Increased data protection with backdoor access.
In their latest move, authorities refer to the National Security Law and the Cybersecurity Law, which are intended to prevent unauthorized access and excessive data collection. It is hard to tell at this point whether this is a power struggle between the state and private companies, which only were able to grow in power because the state has protected their markets, or the state is under pressure to actually take a growing awareness of data protectionamong the population into account.
A 2019 study by the Beijing-based Nandu Personal Information Protection Research Centre conductedon this topic, revealed that 30 percent of respondents had already been victims of data misuse, for example, having their phone numbers, addresses and bank details shared or sold without their knowledge. With the increased growth of online commerce during the Covid epidemic, concerns have grown even further. In this respect, these new political measures are likely to meet with approval among non-shareholders in the population.
However, the timing of this intervention is questionable. The Business models of accused companies were already known long before the IPO. It is striking that data protection is not a matter of equal rights for all. The Chinese government still reserves the right to collect data it deems important for the maintenance of public security. And public security in China is a broad term that can be interpreted differently depending on the situation.
A great amount of data and figures draw a clear picture of the People’s Republic of China: the second largest economy, largest EU trading partner and largest CO2 emitter. But there are also figures that should be treated with caution. Results of political polls in China among these. Unlike economic parameters, they are based on opinions and perception rather than facts.
A few days ago, China.Table author Stefan Baron had argued, based on figures from the 2020 Edelmann Trust Barometer and the results of a long-term study by the Ash Center at Harvard University’s Kennedy School, that the Chinese Communist Party, as a sole and authoritarian ruling organization, had earned a high degree of legitimacy among the country’s population
This portrayal comes not without a share of contradictions. Political scientist and China critic Andreas Fulda reminded people via Twitter of the problems inherent in social science datasets of an authoritarian government and therefore warned against giving them too much credit. “In China’s highly politicized state and society, citizens know the risks of speaking truthfully,”wrote the political scientist from the University of Nottingham.
Humanities generally have the problem that their data sets create fewer facts compared to other sciences because they leave more room for interpretation than, for example, customs statistics on a country’s exports. In China, the implications of an authoritarian government system add to the difficulty. On one hand, the regime’s strategy is to offload corruption and abuse of power onto the lower levels of government in order to be perceived as a beacon in the struggle for the welfare of its citizens. Yet the families of the country’s most powerful men are among the richest families in the country.
On the other hand, participants in polls in liberal societies do not have to fear any repercussion of political statements because they are covered by freedom of expression. Citizens in dictatorships, on the other hand, instinctively express themselves much more cautiously. When a stranger approaches them and immediately asks sensitive political questions, experience admonishes people in dictatorships to express themselves as inconspicuously as possible and, above all, in a non-confrontational manner. Why should they trust a foreign face who asks questions that can get you into trouble with the wrong answers?
Caution lies in the DNA
Correspondents who travel extensively to China on journalistic assignments and talk to people from all walks of life are all too familiar with this phenomenon. It often takes hours of intense conversation to gain people’s trust. Those who persistently keep their eyes on the price discover that, beneath the surface, many differentiated opinions come to light. Contrary to the common belief that Chinese people have no political opinion of their own because state propaganda prevents them from thinking, China’s citizens are very much capable of critically assessing the circumstances under which they are governed. They do not do so naively, however, but with the necessary caution that they developed in their mother’s womb during 75 years of dictatorship.
“Locals often tend to distort sociopolitical realities and conceal what they consider negative and undesirable information that would paint a negative picture of their country,” Ariel Ahram and Paul Goode concluded in 2016 in their influential study, “Researching Authoritarianism in the Discipline of Democracy.” Government officials are apparently more guided by a dictated line when formulating their answers. In her article “The Boundaries of Research in an Authoritarian State” published in the International Journal of Qualitative Methods, social scientist Saltanat Janenova writes: “In the nondemocratic context, government officials arereluctant to share their views openly and tend to talk withinthe “scripts” of state propaganda.”
In the specific case of the Harvard study to which author Baron refers in his opinion piece, 93 percent of respondents attest to their satisfaction with the Chinese central government. This is an astonishingly high amount any democratic government wouldn’t even dare dream of. The only question is whether it can be trusted under the given conditions. Political scientist Fulda accuses Baron of trying to preempt any criticism of the study by pointing out that 31,000 face-to-face interviews were conducted for research purposes. The university commissioned a Chinese company for this purpose, which itself describes as reputable. But here it is important to bear in mind that companies, especially Chinese ones, that aim to measure the political climate in the country are walking on thin ice.
Satisfaction rate puts itself in perspective
If you wish to interview 31,000 people in the People’s Republic, you can’t do so without authorities at the local levels taking notice. So the survey had to be announced and approved. The addiction to control of an authoritarian government means that it wishes to influence scientific freedom. Inconvenient questions are unceremoniously deleted or changed. Press conferences with officials of the Communist Party have operated on exactly this principle for years. And who can guarantee the respondents of the survey that their answers will remain anonymous? Neither the Chinese company commissioned for the survey nor, especially, the powers that be at Harvard University. When Chinese authorities want to know which citizens gave which answers, they will find out. This is certainly no secret to respondents, who are well aware that nothing remains hidden from an inquisitive government. In this mixed situation, a satisfaction rate of 93 percent is put into perspective.
Irena Schneider of the University of Cambridge raises another concern. In her paper “Can we trust Measures of Political Trust?” she addresses the different conceptualizations of the terms when it comes to questions about “political trust,” for example. “Precisely because of the normative and subjective content of political trust, what constitutes a trustworthy institution is unlikely to be the same for citizens in different cultural and regime contexts.” In plain English: citizens living in democracies define political trust quite differently than people under dictatorships.
While it is a legitimate question in both states, comparing these figures does not necessarily tell us anything about whether or not a government enjoys legitimacy among the population. Especially since weak satisfaction rates in democracies by no means deprive a government of legitimacy.
Domestic policy of the CP China
Science
Society
News
VDMA: Germany lost its championship title
Germany’s mechanical engineering companies have lost their title as world export champion to China, according to their own calculations. An initial estimate by the German Engineering Federation (VDMA) for last year shows that the Chinese share of international sales was 15,8 percent, while German mechanical engineering exports accounted for 15,5 percent of the trade volume.
Before the pandemic, German mechanical engineering companies still had a lead of around 1,4 percentage points over their competitors from the Far East; in 2010, this figure was as high as seven percentage points. “The Covid pandemic, in particular, gave China’s rise a strong boost, because the country was affected very early and only very briefly, while European markets suffered a strong damper as a result of the pandemic,” said the VDMA’s head of foreign trade, Ulrich Ackermann, in a statement. “A strong economic recovery within the EU could ensure that machinery exports from Germany and other European countries will grow again in 2021. However, the long-term trend clearly favors China.
China has been the largest producer of machinery and equipment for quite a while now – and “by a long shot,” Ackermann emphasizes. The People’s Republic even produces as much as the USA, Germany, Japan and Italy combined. “It was only a matter of time before China also took the lead in foreign trade in machinery,” said Ackermann.
Nevertheless, the head of the association continues to see opportunities for German manufacturers – even in the People’s Republic. For example, there is a “noticeable backlog” in China in the field of industrial robotics, which promises export opportunities. According to a survey of 222 member companies, around 36 percent of machinery and plant manufacturers from Germany and Switzerland expect the Chinese strategy “Made in China 2025” to be positive for their own business. flee
Coronavirus
Export
Health
Industry
Mechanical Engineering
Trade
VDMA
Huawei secures patent deal with VW supplier
Huawei aims to make money with patent licenses for Volkswagen’s connected cars. The Chinese manufacturer of telecommunications equipment and hardware announced a licensing agreement with a Volkswagen Group supplier on Wednesday. The deal involves patents needed for LTE data radio technology (4G). The deal represents Huawei’s largest licensing agreement in the automotive sector to date, a Huawei spokesman said.
Licensing has become an important business model for Huawei ever since the Shenzhen-based company has considerably lost significance on the international smartphone market due to US sanctions. Huawei has also faced setbacks in its 5G expansion due to geopolitical reservations (China.Table reported). Back in April, Eric Xu, who has the periodic role as CEO of Huawei, said, “We see our role as enabling business partners in the automobile industry to advance into the field autonomous driving” (China.Table reported). Through its licensing agreements, Huawei plans to equip more than 30 million vehicles with its technology. niw
5G
Car Industry
Huawei
Technology
EU delegates call for boycott of Winter Games
The European Parliament advocates a diplomatic boycott of the Winter Olympics in Beijing. The EU Commission, the EU Council and member states must reject invitations from government representatives and diplomats to take part in the 2022 Winter Games, outlines the cross-party draft resolution, which MEPs will vote on Thursday. “Unless the Chinese government demonstrates a notable improvement in the human rights situation in Hong Kong, the Xinjiang Uighur region, Tibet, Inner Mongolia and elsewhere in China,” the draft says.
However, such a decision by the European Parliament would not be binding. Whether it will be heard by the member states remains an open question. According to media reports,Greek Prime Minister Kyriakos Mitsotakis already accepted an invitation to the Winter Games during a phone call with China’s President Xi Jinping on Wednesday.
According to the draft, MEPs will condemn the closure of Hong Kong newspaper Apple Daily and increase pressure on the European Commission to act on the situation in Hong Kong. The closure of Apple Daily and the arrests of journalists mark the definitive end of press freedom and freedom of expression in Hong Kong, the resolution says. The resolution also calls on the EU Commission and member states to put the National Security Law on every agenda of EU-China meetings, including diplomatic preparatory meetings. The EU must also “give back the voices lost to the people of Hong Kong” by helping to archive, publish and document human rights violations and by making books banned in Hong Kong available online.
According to the draft resolution, EU politicians also reiterate their position on the EU-China Investment Agreement (CAI): the agreement currently remains on hold. The Parliament even goes one step further and calls for additional sanctions against China for human rights violations in Hong Kong and Xinjiang. The result of the vote is expected on Thursday. ari
EU
Hongkong
Human Rights
Sports
Xinjiang
EU: WTO to rule in patent disputes
The European Union is demanding information from China regarding several court rulings and thus new legal regulations on intellectual property (IP) in the telecommunications industry. The newly introduced practice in China prohibits foreign companies from using EU courts to enforce disputes over IP rights, as a spokeswoman for the EU Commission’s Directorate-General for Trade told China.Table. The EU is now asking the World Trade Organization to review a total of four Chinese court decisions. “These new laws threat companies, that decide to file complaints with courts outside of China, with fines of up to 130,000 Euros per day,” the EU trade directorate complained. The EU is now reviewing this new measure in detail to ensure China respects the rights of EU patent holders and its WTO commitments.
The verdicts in question have been made by Chinese courts in cases involving Conversant against Huawei, OPPO against Sharp, Xiaomi against InterDigital and Samsung against Ericsson. In the former, a court in the People’s Republic of 2020 issued a preliminary injunction against lawsuits, according to the EU Letter to the WTO. The decision prohibits European patent holders from relying on European court decisions when a disputed IP is at issue. In addition, a fine would then be imposed. “These decisions appear to reinterpret existing laws and regulations and have also led to new regulations being promulgated.” The EU’s request was made under the WTO’s TRIPS agreement, which governs trade-related aspects of intellectual property rights. Initially, the time frame in which China must respond to the request was unclear. ari
EU
Patents
Telecommunications
Trade
WTO
EU Parliament: Sanctions possible without unanimity
The European Parliament has called on the EU Council to drop the principle of unanimity for decisions on sanctions against human rights violations. Individual EU member states would no longer able to simply block decisions on punitive measures. Instead, decisions should be taken by a qualified majority, according to a resolution adopted by the Foreign Affairs Committee on Wednesday evening on the EU’s international sanctions mechanism in the field of human rights (EU Magnitsky Act).
Under this regime, which has been in effect since December 2020, sanctions against four officials and one organization in Xinjiang were enacted at the end of March. The EU Parliament also called for corruption to be included within the scope of the sanctions regime since the EU Magnitsky Act currently does not list it as a punishable offence in conjunction with human rights violations. ari
EU
Human Rights
Sanctions
Xinjiang
Censorship triggers LGBTQ uproar
WeChat, the most widely used social media app in China, allegedly has blocked several online accounts of LGBTQ activism groups. All posts from groups such as Huazong University of Technology’s “Gay Pride” and Peking University’s “ColorsWorld” could no longer be accessed. In its place, a notification appeared: “all content has been blocked and account use has been stopped.” According to a short statement, Wechat had received “relevant complaints” about the pages. Account names of the groups were changed to “Untitled Account.” The feminist student group “Zhihe Society” of Fudan University in Shanghai also stated its official WeChat account had been deleted. “It is very clear that there is no way Zhihe’s original account can be retrieved in the short term,” the organization said.
Chinese online networks have repeatedly censored LGBTQ-related content on social media platforms and video streaming apps, even though China’s leadership decriminalized homosexuality back in 1997. But authorities apparently continue to deem posts with same-sex content as undesirable.
These recent bans caused outrage in online communities, with some users calling for online protests and renaming their profiles “Unnamed Account” in solidarity with LGBTQ groups. However, these calls for protest were also deleted a short time later. flee
Society
Technology
WeChat
Portrait
Xia Xu-Fees – Consultant, a dream job
Xia Xu-Fees, Business Consultant and Managing Director of China Business Upgrade
It was her father who sparked Xia Xu-Fees’ interest in Germany. He had studied mechanical engineering and would always tell her that Germany was number one in this field. His daughter’s mentality seemed rather German to him – so straightforward and direct. He was probably right about that, Xu-Fees says with a laugh: “I just say what I think.”
Dealing with different mentalities is an essential aspect of Xu-Fee’s everyday work. Four years ago, she founded ‘China Business Upgrade’, a consulting company that specializes in preparing German companies for business relations in China – and vice versa. She supports companies on the search for business partners and the establishment of locations in China and Germany, as well as the founding of companies and the optimization of businesses. Her main field is business development and strategy. Sometimes she has to do some convincing first: just because you successfully built up a company in Germany does not automatically a good employer in China – the working cultures of the two countries differ too greatly
Xu-Fees was born in Dalian, a port city in northeastern China. Following the advice of her father, who has since passed away, she first studied German and later International Economics and Trade while working. After working for an import-export company for several years, she came to Germany in 2001 and completed her MBA at the TH Nuremberg. She then worked for the Franconian tool manufacturerEmuge – after only two years she was responsible for setting up a subsidiary in Suzhou. This was followed by further positions in Germany and China, including Business Development Manager at the Zhongde Metal Group, which supports German and Chinese companies entering the market in the other country.
Medium-sized companies account for 35 percent of total sales in China
In 2017, Xu-Fees founded her own business, China Business Upgrade. “Consulting has always been my dream job,” she says. As a one-woman business, she mainly advises small and medium-sized companies in the fields of mechanical engineering, tool manufacturing, plant engineering and automation. In addition to her consulting work, she holds guest lectures and talks at the TH Nuremberg and offers coaching and training for companies.
Covid has put a “dent” in her self-employment, but she feels that things are now clearly looking up again for her clients. Global political tensions over China only played a minor role for mid-sized companies she counsels. “Many companies generate about 35 percent of their total sales in China. These companies cannot ignore China.”
Xu-Fees lives with her daughter and husband in a small town near Nuremberg. Until the outbreak of the pandemic, she traveled to China regularly, both professionally and privately. She is quite certain what she will do first as soon as she is able to return to China: “I want to visit my mother and eat her dishes.” Her favorite food: Diguawan – deep-fried sweet potato balls. Sarah Schaefer
Industry
Mechanical Engineering
Persons of interest
Andreas Gorbach is taking on new responsibilities at Daimler Truck AG as a new member of the Board of Management and Head of Development. His new tasks include procurement and Daimler Trucks China, plus the newly created Truck Technology Group as the central unit for powertrain, vehicle software, electrics/electronics and global purchasing. He previously held the position of CEO of Cellcentric, a joint venture between Daimler Truck and the Volvo Group.
His predecessor Sven Ennerst will continue to oversee the start of production of Mercedes-Benz trucks in China until the end of 2021. He then plans to retire after more than 30 years at Daimler.
Martin Kollmann is celebrating 25 years at Bremen-based freight forwarding service Karl Gross. Since 2000, he supervised the company’s business in China and moved his permanent residence to Shanghai at the end of 2003. He has been a member of the executive board of the Karl Gross Group since 2010.
Car Industry
Dessert
For thousands of years, the Emperor’s Canal was China’s most important artery. Today, it is hardly in use for the transport of goods. For this reason, more and more municipalities are turning the banks along the canal into recreational- and amusement parks. Illustrated: the waterfront promenade of the city of Cangzhou in the province of Hebei.
