China-Russia + Huawei + Iran + Tariffs + Knorr-Bremse + Export Control Act + Fabian von Heimburg
China and Russia – new front against the West?
Huawei seeks its way out of the US trap
Limits to Iranian isolation
EU decides on further aluminum tariffs
Forced labor in Xinjiang – charges filed in France against clothing manufacturer
Fewer Chinese want to buy ivory
Knorr-Bremse invests in Dalian
Tools: Regulations in Export Control Law
Profile: Fabian von Heimburg
Dear reader,
At first glance, the friendship between China and Russia is boundless. In 2017 and 2018, Putin and Xi awarded each other their respective countries’ highest honors. Apart from awarding medals, the countries cooperate in payment transactions, commodity dealsand have jointspace plans. However, as Michael Radunski reports: When it comes to the military, the New Silk Road and Arctic policy, the friendship is not without tensions.
To mitigate US sanctions, Huaweihasstockpiledmassive amounts ofchips. But even the largest stockpile eventually runs out. Finn Mayer-Kuckuk took a close look at the company’sannualstrategy presentation and reports: The global chip shortagecouldsoon hit Huawei especially hard.
Frank Sieren looks at China-Iran relations. Beijing is increasing its oil imports from the country and recently signed a cooperation agreementwith Tehran. Although the agreement remains vague, pressure is mounting on the EU, which also wants to do good business with Tehran, as Sieren reports. What Brussels and Beijing have in common is that both sides want to stick to the nuclear agreement with Iran.
Today, I would especially like to recommend China.Table “Tools” to you. In this new category, external experts will now provide you with useful tools that will help you navigate through the Chinese legal system, explain innovations in business regulation and give you practical tips for success in the Chinese market. We will start with Shanghai lawyer and partner Sebastian Wiendieck from Rödl &Partner.
Angela Merkel and Heiko Maas are alarmed. The German chancellor and her foreign minister are unanimously warning that Russia must not be driven into China’s arms – and thus justifying their adherence to Nord Stream 2, for example.
The German-Russian pipeline project is highly controversial in the West. But while the debate continues here, thousands of kilometers to the east, facts have long since been established: “Power of Siberia” is the name of the Chinese-Russian counterpart to Nord Stream 2. Since 2019, the pipeline has been delivering gas from Yakutia to the People’s Republic. Beijing has secured Russian gas for the next 30 years – for $400 billion.
More than gas and oil
The fact that the rediscovered closeness between China and Russia is not limited to trade in raw materials became clear again in March: While a frosty ice age prevailed between China and the US in Alaska, Beijing and Moscow demonstrated the greatest possible harmony at the foreign ministers’ meeting in Guilin in southern China. Ruan Zongze of the China Institute of International Studies emphasized to the Chinese newspaper Global Times the global focus. “The two countries are showing their determination to maintain global justice in a multipolar world, while the US is imposing its ideology on others under the guise of multilateralism and interfering in states to assert its own hegemony.”
This has long been reflected in a wide range of cooperation – from finance and technology to international diplomacy.
Move away from Swift, then replace the dollar
On the international financial market, the big goal is to replace theUS dollaras the global reserve currency – and at least in bilateral trade, this goal has recently come a great deal closer: In 2020, for the first time, more than half of trade between China and Russia was not conducted in US dollars.
As a next intermediate step, Russia’s Foreign Minister Lavrov called at the Guilin meeting for a swift transition away from Western payment systems such as Swift. “Washington abuses the Swift system to arbitrarily sanction countries. This has caused discontent internationally,” Dong Dengxin told the Global Times. The director of Wuhan University’s Finance and Securities Institute believes, “If China and Russia manage to jointly challenge dollar hegemony, a lot of countries would join the new system.” Dong points to China’s growing trade power and therefore suggests the yuan as an alternative to the US dollar. According to Russia Today, quite a few Russian bankshave alreadyjoined the “China International Payment System”, mainly to handle bilateral trade. Dong recommends successively expanding this system – for example, to Central Asia within the framework of the New Silk Road.
Mobile radio and space travel
Another important area is telecommunications and network technology. Since both China and the US are increasingly relying on national developments here, Russia will have to choose sides in view of its own lack of expertise – and the trend seems clear: the Chinese technology group Huawei, which is controversial in the West, is to build the 5G network in Russia together with the domestic company MTS. This will give Russia fast internet and Huawei a huge sales market.
Complementary interests have also been identified in the space sector. China has been rapidly catching up and has achieved a number of successes in recent years: It was the first nation to reach the far side of the moon, it sent a mission to Mars with Tianwen-1, and the Chang’e mission successfully collected rock samples on the moon in December. However, at the instigation of the USA, the People’s Republic has so far been excluded from intergovernmental cooperation such as the International Space Station (ISS).
Russia, on the other hand, is involved in the ISS, but the great successes of the former leading power are already some time ago. And so, the Russian space agency Roscosmos and the Chinese space administration agreed at the beginning of March to jointly build a lunar station.
Best friends blocking UN
Probably the most visible successes so far have been achieved at UN headquarters. Here, Beijing and Moscow put the brakes on the West by regularly blocking the Security Council – whether to protect the Syrian regime around Bashar al Assad from condemnation or, more recently, the military junta in Myanmar. Beijing and Moscow agree that the West should stay out of “internal affairs”. This is to prevent precedents at home: On the Chinese side, that means Hong Kong and Xinjiang; on the Russian side, the annexation of Crimea or the fight against opposition figures like Alexei Nawalny.
And at the top of both states, it also fits at the moment: Xi Jinping as well as Vladimir Putin represent the political style of the strongman. Both suppress domestic competition with an iron fist; both have undermined constitutional term limits. Such is their mutual esteem that in 2019, Xi publicly proclaimed, “President Putin is my best friend.”
Friendship ends in your own backyard
Despite all this, the friendship between China and Russia is not a love affair. If the interests are not complementary, cooperation quickly turns into competition. This becomes clear in the traditional spheres of influence of the two great powers.
Here, of all things, Xi’s prestige project could provide fuel for the fire: The New Silk Road runs right through Central Asia – a region that Russia regards as its own backyard. So far, Beijing has been mindful of that sensibility. When it opened a base in Tajikistan in 2016, it had consulted Moscow beforehand.
However, the New Silk Road projects have replaced Russia as the region’s main trading partner. According to UNCTAD calculations, China’s trade volume with Central Asian states amounted to $46.47 billion in 2019, while Russia managed to turn over just $28.64 billion.
The situation is reversed around the South China Sea, where Beijing is keeping a wary eye on Russia’s discreet restraint – despite Moscow’s traditionally good relations with states such as Vietnam.
The first signs of disgruntlement, on the other hand, can be seen in the race for the Arctic, where Russia, as an Arctic littoral state, is suspicious of Beijing’s ambitions as a self-proclaimed “state close to the Arctic”.
Distrustful distance
In the military areajoint maneuvers are increasing, but here too, a distrustful distance still prevails. Until the last decade, Moscow was able to profitably sell not-so-up-to-date equipment such as SU-35 jets or S-400 rockets to Beijing. But China has caught up – and is only interested in the latest technologies. Putin, however, has repeatedly made it clear that he is not prepared to share Moscow’s military silverware with his supposed friends from Beijing. And even in less sensitive areas such as civil aviation, little has so far come of grandiose announcements.
China is also keeping its distance accordingly. When Putin publicly refused to rule out an alliance with China last October, Beijing politely declined. “Military alliances were part of the Cold War,” Cheng Yijun told the South China Morning Post. A Sino-Russian military alliance would drag Beijing into conflicts where it had no interests of its own, the Chinese Academy of Social Sciences scholar said, explaining the Chinese rejection.
Pragmatic realpolitik instead of ‘socialist brother states’ alliance
The broad cooperation between Moscow and Beijing shows that the concerns of Merkel and Maas are entirely justified. Just as the West was imposing sanctions over the Crimean annexation in 2014, construction of the “Power of Siberia” pipeline began. Russia is turning east under Putin.
However, a firm alliance or, as in the past, an ideological front, when they called themselves “socialist brother states”, has not emerged. Rather, it is a matter of pragmatic realpolitik.
The supposed friends in the east still complement each other. But China’s rise already threatens conflict. Russia’s pride and its self-perception as a great power will be difficult to reconcile in the long term with its position as China’s junior partner.
Telecoms equipment maker Huawei sees dealing with US sanctions as mainly a race against time. The company confirmed it had bought up chips before the trade restrictions took effect in the market, which it has used to keep production going so far. “We expect that our new partners will be able to supply the chipsets we need in the foreseeable future,” board member Eric Xu said Monday at the annual presentation of the group’s strategy in Shenzhen. “We now hope our inventories will last until that point is reached.”
As usual for Huawei presentations, Xu did not spare dramatic words to describe the group’s distress:“Our goal is first to survive at all.” He said the company had jettisoned all hope that the US would return to a conciliatory course toward China. “And we can’t base our business strategy on illusions and unrealistic hopes.” Huawei said it expects to have to adjust to being on the US blacklist in the longer term.
In May 2019, then US President Donald Trump had placed Huawei on the “Entity List” of dangerous foreign companies with which suppliers are not allowed to do business without fearing the wrath of the government in Washington. That was a harsh blow: Huawei indeed develops a good portion of its own electronics. But a whole series of particularly sophisticated chips come fromsuppliers. This is quite normal; German, South Korean, or Japanese technology companies also rely on the skills of their international partners. For Huawei, the ban means that it will no longer be able to manufacture part of its product range.
The USA forces China to catch up
Xu acknowledged that the global shortage of microchips is in good part the result of Chinese companies’ response to the US attacks. “Many companies are now holding inventories for half a year.” The sanctions against Huawei and other well-known Chinese firms have spread considerable nervousness in the industry. That has led to hoarding purchases ofsemiconductor elements. Previously, the industry had relied on short delivery times.
Xu now expects a monumental boost to China’s tech self-reliance: “Thanks to the huge surge in domestic demand, companies will step into the breach to invest accordingly and meet the needs of Huawei and the other Chinese companies.”
Huawei had been the third-largest single buyer of mobile chipsets after Apple and Samsung before the sanctions, so it can exert considerable market power. In addition, the industry as a whole is looking to diversify to more different vendors than before – including in Europe and other Asian countries. He sees a wave of investment rolling in.
Xu, therefore, considers the damage caused by the US sanctions to be an own goal. He says that the ongoing shortage has damaged confidence in the chip industry’s performance.This is a direct result of the disruptions caused by the erratic US trade policy. Even Germany, France, and other European countries are now putting pressure on themselves to become less dependent on semiconductor imports – and are likely to order less from America in the future. For now, Xu does not expect US President Joe Biden to fundamentally change policy. “In the end, the end customers will pay the bill through price increases for electronics,” Xu warned.
No car planned under own brand
In his optimism about the production shift, Eric Xu did not mention that the complexity of the required components prevents alternatives from coming to market quickly. The most technically advanced components in particular also enjoy tight patent protection. Xu, who is also currently taking on the role of CEO at Huawei in rotation, was also less than specific about numbers and timeframes during his remarks. He didn’t say exactly when the alternatives might arrive – nor how long Huawei’s stock will last.
He also declined to quantify the damage to sales caused by US policy. By the end of 2020, smartphone sales had fallen to 2017 levels. Meanwhile, Huawei’s main business of equipment for telecom companies benefited from the 5G rollout in a number of major markets. These include China and Indonesia, for example. As a result, the company is still making a profit.
The second big topic at the Q&A session for analysts and journalists was Huawei’s plans for self-driving cars. The company has been developing chips and software for autonomous driving since 2012. After competitor Xiaomi announced plans to release cars under its own brand, Chinese media were now curious about Huawei’s reaction. However, Xu clarified that his company has no plans to move into the end-user market for product groups beyond mobile phones. “We see our role as enabling business partners in the auto industry to push into autonomous driving”. That is a “wise strategy” that better suits Huawei’s role.
It is a broad cirlce that has met in Vienna. Representatives of China, France, Germany, Russia, the United Kingdom, and Iran discussed a possible US return to the Iran nuclear deal (JCPOA) in a first round of negotiations until last Friday Aljazeera television described the progress of the talks as “hopeful”.
There have been no direct negotiations between the US and Iran yet. However, US President Joe Biden had stated that the US was open to a return. First, however, Tehran would have to comply with all the restrictions of the pact.
A no-win situation for everyone involved
US special envoy Robert Malley said Iran was continuing to store uranium and experiment with advanced nuclear technology while restricting access by International Atomic Energy Agency (IAEA) experts. Iran had resumed enriching fissile material when then-US President Donald Trump pulled out of the deal in 2018, although the IAEA said Iran had complied with all conditions at the time. So now Iran, for its part, is demanding that the Americans act first. “Iran will resume full compliance with its obligations under the agreement if the US lifts its sanctions against Iran,” President Hassan Rohani said. The question now is who will make the first move.
It remains to be seen whether Biden will get a majority in the US Congress for this, as his democratic predecessor and friend Barack Obama did. Only then could he lift the sanctions against Iranian banks,which were tightened again last autumn.
China undermines sanctions
Meanwhile, China is already moving to undermine US Iran sanctions.
In March this year alone, Beijing’s oil imports rose to a new high. While China imported an average of 2.2 million tons of oil in 2020, the figure was already 3.75 million tons in March. In January, imports were already at 3.37 million tons.
To keep the affront from becoming too great, the money for the oil is not transferred to Iran, but remains in escrow accounts in China. In addition, the Chinese tankers loading Iranian oil are turning off their transponders. This means that their signals can no longer be picked up by satellites. However, the Americans can, of course, still track the ships on image satellites. In addition, the cargo is also transhipped on its way to China, and some of it is briefly sold to third countries in the process.
So far, at least, the Americans are doing nothing about it. Political observers conclude that Washington is preparing to allow the agreement to come back into force. But it may also be because America’s oil imports from Russia have been rising sharply since 2018. In 2020, the US imported more oil from Russia than from Saudi Arabia. However: Like Iran, the US has actually imposed sanctions on Russia.
In addition to the renewed oil trade, Iran and China signed a 25-year cooperation agreement on March 26. The “Strategic Cooperation Agreement” is being hailed as a comprehensive deepening of Sino-Iranian relations. According to it, China could invest between $400 billion and $800 billion in Iran. However, both sides immediately made it clear that the plan did not contain any “quantitative, specific contracts” so far and should rather be seen as a “non-binding document”. Chinese Foreign Ministry spokesman Zhao Lijian said the day after the signing that the overall strategic agreement between China and Iran “will provide a general framework for future cooperation between China and Iran.” Obviously, they don’t want to provoke the Americans any further.
Nevertheless, the development is obvious – and it increases the pressure on the Europeans to act. Because they too are interested in close economic relations with Iran.
Diplomatic success of the new world order
The 2015 international agreement is still seen by the remaining parties to the treaty – Russia, China, Germany, France, and the United Kingdom – as an important milestone in curbing the global spread of nuclear weapons and reintegrating Iran, a regional power, more firmly into the global community.
Never before have Beijing and Berlin, with the support of the Russians, the French, and the British, cooperated so closely to convince the Americans to take such a step. President Obama finally agreed.
Fixing Trump’s mistakes
Donald Trump, however, unilaterally terminated the agreement in May 2018, calling it the “worst deal ever”. It was a thorn in his side that majorities had formed globally against the US. But his policy only led China and the EU to oppose him even more clearly.
Even then, the EU did not want to support Trump’s sanctions and his strategy of “maximum pressure”. The thinking in Beijing is similar. There, the deal remains an “important pillar” for stability and peace in the Middle East, as the Chinese Foreign Ministry explained.
Diplomat Wang Qun, who is now representing China at the negotiations in Vienna, reiterated Beijing’s stance, saying Washington’s “illegal sanctions” should be lifted. China has a saying, Wang said: “The one who ties the knot should also be the one who unties it.”
Lifting the sanction unilaterally imposed by the US would also ease tensions in another conflict. The reason for a trial in the Meng Wanzhou case, the daughter of Huawei founder Ren Zhengfei, would fall away without Biden coming off as too soft. Meng had been detained in Canada at the request of the US in late 2018. Washington accuses her of breaking US sanctions on Iran. The company and she vehemently deny that. If Meng is released, this would probably also apply to the two Canadians who were arrested by Beijing in return.
Beijing has a particular interest in seeing the nuclear deal revived. After all, China is Iran’s most important trading partner. Before the US pulled out of the international nuclear deal in 2018, China was the world’s largest buyer of Iranian oil. China has the second-highest oil consumption in the world and gets just over 50 percent of its imports from the Middle East.
Iran is also attractive to Beijing in another respect: The country offers a relatively untapped market for Chinese products and Chinese services. The current government in Tehran, however, does not have much time for negotiations. A new president will be elected in June. Incumbent Rohani may not run again after two terms. Rohani is in favor of reviving the nuclear deal. It is not so clear with his possible successors. Against Rohani’s wishes, Tehran’s parliament passed a law in January ordering the Islamic Republic’s authorities to ramp up uranium enrichment from about four percent to 20 percent. The hardliners are getting into position.
Iran
Meng Wanzhou
Raw materials
News
EU decides on further aluminum tariffs
The EU will provisionallyimposeanti-dumping duties on aluminum flat-rolled products from China. They will apply from Tuesday and amount to between 19.3 and 46.7 percent. The reason for the levies is a preliminary investigation by the EU, according to which Chinese producers are alleged to have sold aluminum products such as sheet, plate and foil to the EU at artificially low prices. The cost of raw materials, energy, and labor to produce said aluminum products was “not the result of free market forces” and was “influenced by significant state interference“, the EU investigation said. It stems from a complaint by the trade association European Aluminium.
Flat-rolled aluminum products are used in a wide range of applications in the construction sector, technical applications, as well as in transport sector, and consumer goods industry.
According to Reuters, the investigation is to be concluded in October. It will then be decided whether the EU duties will be imposed for a period of five years. At the end of March, the EU Commission had already imposed anti-dumping duties on aluminum extrusions from China. nib
Metals
Raw materials
Forced labor in Xinjiang – charges filed in France against clothing manufacturer
Several non-governmental organizations (NGOs), together with an Uyghur woman, have filed a complaint inFranceagainst four multinational clothing companies. Specifically, the complaint concerns Inditex (owner of the brands Zara, Bershka, among others), Uniqlo, SMCP (Sandro, Maje, among others), and the sports shoe manufacturer Skechers. They allegedly profited from forced labor of the Muslim minority in China (China.Table reported). The complaint filed by the anti-corruption association Sherpa and the European Uyghur Institute (EUI) talks about “concealment of forced labor and crimes against humanity”.
The organizations cite a March 2020 report by the Australian NGO ASPI (Australian Strategic Policy Institute) that disclosed the use of Uyghurs as forced laborers. Now the plaintiffs are calling on the French judiciary to investigate the companies mentioned. They say they are still subcontracting, thereby accepting the production and marketing of cotton and cotton products produced under forced labor. In doing so, the companies are “complicit in the serious human rights crimes committed in Xinjiang,” Sherpa and EUI said in a statement.
The complaint was filed in Paris and supported by French MEP Raphaël Glucksmann, among others. It was “a decisive step” in support of the minority, Glucksmann said on Monday. Lawyer William Bourdon, who is representing the complaint, told the AFP news agency legal action against clothing companies on the basis of accusations of concealment had not been taken in this form before in France. He called on the French judiciary to be “courageous” and “innovative”. ari
Fashion
Alibaba’s Ant Financial to be restructured
Alibaba already had to accept a hefty fine for violating the anti-monopoly law (China.Table reported) these days. On Monday, the second strike against the world’s largest online trading platform followed: Beijingordered the conversion of Alibaba’s financial arm Ant Financial into a normal financial holding company. This means that in the future, Ant Financial will be subject to the state financial supervisory authorities like a regular bank and will have to comply with stricter rules. This includes, for example, that Ant must maintain the same liquidity as a bank. This was announced by central bank vice director Pan Gongsheng after a meeting of China’s banking and securities regulators with Ant Group’s management in Beijing. Ant applied for the conversion as recently as Monday.
According to Pan, Ant must reduce the liquidity risks of its financial fund Yu’e Bao and the high risks of its financial services. Loans must henceforth be offered in accordance with government regulations on lending and data protection. The company must also stop “illegal” activities in loans, insurance, and asset management and eliminate “unfair competition” in its services.
Ant is the world’s largest fintech platform. The group operates Alipay, a ubiquitous mobile payment service in China, as well as a lending platform and insurance businesses. All of this is now under regulatory supervision. In addition, Ant is currently setting up a licensed credit reporting service. Ant will “return to its origins by focusing on micropayments and providing convenience to consumers and small businesses”, the Hangzhou-based company said. Just last weekend, China’s competition authorities imposed a record fine of ¥18 billion (€2.3 billion) on the group’s parent company Alibaba. The company had exploited its dominant market position to force retailers to offer their goods exclusively via Alibaba, according to the justification. Alibaba rejected that but accepted the fine and played down its significance on Monday. It was glad the matter was closed, Alibaba vice chairman Joe Tsai said, according to a report in the Hong Kong newspaper South China Morning Post – which is owned by Alibaba founder Jack Ma. Alibaba was satisfied that there was nothing wrong with “our business model of a platform company”, Tsai said.
Alibaba has been in the government’s sights since a critical speech by Jack Ma about financial authorities torpedoing Ant Financial’s IPO, among other things. Since then, it was unclear what would happen next with Ant. The penalty notice now clears the way for the planned listing, the value of which, however, is likely to be lower for the time being. Ingeneral, Beijing is currently tightening its control over the country’sfintech industry. ck
Alibaba
Ant Group
Finance
Jack Ma
Technology
Fewer Chinese want to buy ivory
The demand for ivory in China continues to decline. However, a small group still wants to hold on to the “white gold”. This is the result of a consumer survey conducted by the conservation organization WWF in cooperation with the research organization GlobeScan. According to the survey, only 19 percent of the people questioned in the People’s Republic intend to buy ivory in the future. As soon as they are made aware of the nationwide ban on ivory trade, it is even only 8 percent.
China’s government banned the purchase of ivory in 2017. At that time, 43 and 18 percent of respondents, respectively, said they wanted to purchase elephant tusks or products made from them. The numbers have more than halved since then. The survey involved 2,000 consumers in 15 cities across China over four years.
The WWF calls the new survey results an “encouraging development”. Only a month ago, the World Conservation Union IUCN upgraded Africa’s two elephant species on the International Red List. The African forest elephant is in immediate “danger of extinction”. The African savanna elephant is considered “critically endangered”.
“The fate of elephants is decided by ivory,” warns Dr. Arnulf Köhncke, head of species conservation at WWF Germany. The demand from Chinese ivory buyers is one of the main drivers of the global ivory trade. Therefore, the ivory ban issued in China in 2017 is a decisive step towards bringing demand to a halt. flee
Agriculture
Import
Trade
Knorr-Bremse invests in Dalian
Braking systems manufacturer Knorr-Bremse is investing in the expansion of its Chinese plant in Dalian in Liaoning province. According to the company, the Chinese subsidiaries Knorr-Bremse Commercial Vehicle Systems (Shanghai) Co., Ltd. and Knorr-Bremse Braking Systems for Commercial Vehicles (Dalian) Co., Ltd. together with Knorr-Bremse AG and the local government of Jinpu New District reached agreement in mid-March on the investment in Jinpu New District. The new plant is to replace the current plants. Constructionis scheduled tostart in June 2021. Production is targeted to start in December 2022. The bundling of research and development, manufacturing and testing facilities is expected to create 300 new jobs. bw
Car Industry
Industry
Tools
Regulations in the Export Control Act
Goods, technologies as well as services, and related technical data, documentation, etc., in the areas of military and nuclear products as well as dual-use goods, are subject to export controls.
It should be noted that export control applies not only to the transfer of controlled goods from China to foreign countries but also when such goods are made available by Chinese persons, legal entities, and other organizations to foreign persons or organizations within China – i.e., even without a cross-border transfer having taken place. The State Administration ofExport Control is responsible for export control.
List of goods concerned
A list of all goods and services subject to export control is published by the supervisory authority. In addition, the supervisory authority has the power to place non-listed goods and technology under export control on a temporary basis, but not for a period longer than two years.
Anapplication must be submitted to the supervisory authority for the export of goods and services subject to export control. The supervisory authority may prohibit exports in general or for certain countries and regions, or certain foreign persons or entities.
Listing of organizations and persons
In addition to the list of goods and services concerned, the supervisory authority shall also draw up a list of persons and entities in respect of which the supervisory authority may take specific measures, such as prohibiting and/or restricting trade in controlled goods or suspending exports of controlled goods.
Prohibitions and penalties
The law prohibits any person or organization from providing agency, freight and delivery services, financial services, customs declaration services, as well as e-commerce trading platform services to exporters conducting illegal exports.
Furthermore, China reserves the right in the law to take appropriate countermeasuresagainst any country or region that abuses export control regulations to endanger China’s national security and interests.
In the event of violations of the law, for example, by exporting prohibited goods or exporting without the appropriate permit, the law provides for criminal sanctions.
In addition, the law is also extraterritorially applicable. That is, if an organization or individual outside China violates the provisions of this law, thereby endangering China’snational security andinterests and hindering the fulfillment of international obligations, that person or organization may be held legally liable in China.
Legal implications
Exporters should thoroughly check the list of goods covered by export control to see whether their own goods are affected. In such a case, a corresponding export permit should be obtained immediately. The same applies to third parties who provide services for exporters in the course of the export. In any case, such service providers should always obtain confirmation from the exporter that the export of the goods concerned is not subject to export control or is permitted.
The implementation of the law in practice and the concrete effects and associated recommendations for action remain to be seen.
The author, Sebastian Wiendieck, is a lawyer and partner of Rödl & Partner GmbH Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft in Shanghai.
Chinese Communist Party
Geopolitics
Profile
Fabian von Heimburg
Founder Hotnest Technology
2020 was “personally his best year” for his start-up Hotnest, says Fabian von Heimburg. The 32-year-old Munich-based marketing technology provider does not want to give exact figures. However, he says that sales increased by 200 percent. Like many other digital companies, Hotnest benefited from the fact that the COVID-19 pandemic accelerated digitization. “We offer data-based solutions for consumer brand growth in China,” says von Heimburg, “that’s what everyone wants right now”.
After studying at the London School of Economics, Fabian von Heimburg went to China in 2014 to set up something of his own. Not an easy path. Together with his Chinese fellow student Qing Mu, he started from scratch: “We were young and naive,” he says, “we had nothing but our vision. No technology, no network, no market knowledge.” As a foreigner in the Chinese start-up scene, he is still exotic. Several times, the young company was on the verge of bankruptcy. And although von Heimburg learned Mandarin for up to twelve hours a day, he almost didn’t understand his employees for the first two years. Today he speaks the language fluently.
Fabian von Heimburg as an exotic in an unknown land
Why didn’t he just move to Berlin or Silicon Valley for his start-up? “I’ve always been fascinated by foreign cultures. And China is completely different from everything I knew in that respect.” He first got to know China better during a semester abroad in Beijing in 2011. The country with its long history, he suspected at the time, “has incredible potential”. Today, this desire to understand another country is still his main motivation.
Now Hotnest has 40 employees, is profitable, and growing fast. More than a dozen self-developed algorithms search the Chinese consumer internet to help consumer brands scale automatically. It tracks up to 40 Chinese platforms such as Wechat and Weibo – hundreds of millions of data points in total. The software also aggregates and manages several thousand agencies. Thanks to the technology, marketing for the entire value chain is covered: from the launch to the sale of products.
Hotnest was supposed to expand to Europe in 2020 to better connect the two markets. However, because of the COVID-19 pandemic, von Heimburg postponed the office opening until 2021. In any case, he sees Europe as his second, more political mission: to further develop the start-up economy. That’s why he’s involved with the German Start-ups Association. “It frustrates me a lot to see how Europe is losing out in the digital race between the US and China.” He says the EU doesn’t have a functioning, independent start-up ecosystem like the US and China. You would actually have to invest €100 billion here every year to become more independent, von Heimburg says. Fortunately, things are finally starting to move. “This is where I want to bridge the gap with my experience and knowledge.” Adrian Meyer
E-commerce
Technology
Trade
Dessert
“There are eggs!!!” In Beijing’s Dongcheng district on Monday, the nutritious farm products are handed out next to a vaccination station. However, not to everyone: You have to be over 60 – and get vaccinated against COVID.
Forced labor in Xinjiang – charges filed in France against clothing manufacturer
Fewer Chinese want to buy ivory
Knorr-Bremse invests in Dalian
Tools: Regulations in Export Control Law
Profile: Fabian von Heimburg
Dear reader,
At first glance, the friendship between China and Russia is boundless. In 2017 and 2018, Putin and Xi awarded each other their respective countries’ highest honors. Apart from awarding medals, the countries cooperate in payment transactions, commodity dealsand have jointspace plans. However, as Michael Radunski reports: When it comes to the military, the New Silk Road and Arctic policy, the friendship is not without tensions.
To mitigate US sanctions, Huaweihasstockpiledmassive amounts ofchips. But even the largest stockpile eventually runs out. Finn Mayer-Kuckuk took a close look at the company’sannualstrategy presentation and reports: The global chip shortagecouldsoon hit Huawei especially hard.
Frank Sieren looks at China-Iran relations. Beijing is increasing its oil imports from the country and recently signed a cooperation agreementwith Tehran. Although the agreement remains vague, pressure is mounting on the EU, which also wants to do good business with Tehran, as Sieren reports. What Brussels and Beijing have in common is that both sides want to stick to the nuclear agreement with Iran.
Today, I would especially like to recommend China.Table “Tools” to you. In this new category, external experts will now provide you with useful tools that will help you navigate through the Chinese legal system, explain innovations in business regulation and give you practical tips for success in the Chinese market. We will start with Shanghai lawyer and partner Sebastian Wiendieck from Rödl &Partner.
Angela Merkel and Heiko Maas are alarmed. The German chancellor and her foreign minister are unanimously warning that Russia must not be driven into China’s arms – and thus justifying their adherence to Nord Stream 2, for example.
The German-Russian pipeline project is highly controversial in the West. But while the debate continues here, thousands of kilometers to the east, facts have long since been established: “Power of Siberia” is the name of the Chinese-Russian counterpart to Nord Stream 2. Since 2019, the pipeline has been delivering gas from Yakutia to the People’s Republic. Beijing has secured Russian gas for the next 30 years – for $400 billion.
More than gas and oil
The fact that the rediscovered closeness between China and Russia is not limited to trade in raw materials became clear again in March: While a frosty ice age prevailed between China and the US in Alaska, Beijing and Moscow demonstrated the greatest possible harmony at the foreign ministers’ meeting in Guilin in southern China. Ruan Zongze of the China Institute of International Studies emphasized to the Chinese newspaper Global Times the global focus. “The two countries are showing their determination to maintain global justice in a multipolar world, while the US is imposing its ideology on others under the guise of multilateralism and interfering in states to assert its own hegemony.”
This has long been reflected in a wide range of cooperation – from finance and technology to international diplomacy.
Move away from Swift, then replace the dollar
On the international financial market, the big goal is to replace theUS dollaras the global reserve currency – and at least in bilateral trade, this goal has recently come a great deal closer: In 2020, for the first time, more than half of trade between China and Russia was not conducted in US dollars.
As a next intermediate step, Russia’s Foreign Minister Lavrov called at the Guilin meeting for a swift transition away from Western payment systems such as Swift. “Washington abuses the Swift system to arbitrarily sanction countries. This has caused discontent internationally,” Dong Dengxin told the Global Times. The director of Wuhan University’s Finance and Securities Institute believes, “If China and Russia manage to jointly challenge dollar hegemony, a lot of countries would join the new system.” Dong points to China’s growing trade power and therefore suggests the yuan as an alternative to the US dollar. According to Russia Today, quite a few Russian bankshave alreadyjoined the “China International Payment System”, mainly to handle bilateral trade. Dong recommends successively expanding this system – for example, to Central Asia within the framework of the New Silk Road.
Mobile radio and space travel
Another important area is telecommunications and network technology. Since both China and the US are increasingly relying on national developments here, Russia will have to choose sides in view of its own lack of expertise – and the trend seems clear: the Chinese technology group Huawei, which is controversial in the West, is to build the 5G network in Russia together with the domestic company MTS. This will give Russia fast internet and Huawei a huge sales market.
Complementary interests have also been identified in the space sector. China has been rapidly catching up and has achieved a number of successes in recent years: It was the first nation to reach the far side of the moon, it sent a mission to Mars with Tianwen-1, and the Chang’e mission successfully collected rock samples on the moon in December. However, at the instigation of the USA, the People’s Republic has so far been excluded from intergovernmental cooperation such as the International Space Station (ISS).
Russia, on the other hand, is involved in the ISS, but the great successes of the former leading power are already some time ago. And so, the Russian space agency Roscosmos and the Chinese space administration agreed at the beginning of March to jointly build a lunar station.
Best friends blocking UN
Probably the most visible successes so far have been achieved at UN headquarters. Here, Beijing and Moscow put the brakes on the West by regularly blocking the Security Council – whether to protect the Syrian regime around Bashar al Assad from condemnation or, more recently, the military junta in Myanmar. Beijing and Moscow agree that the West should stay out of “internal affairs”. This is to prevent precedents at home: On the Chinese side, that means Hong Kong and Xinjiang; on the Russian side, the annexation of Crimea or the fight against opposition figures like Alexei Nawalny.
And at the top of both states, it also fits at the moment: Xi Jinping as well as Vladimir Putin represent the political style of the strongman. Both suppress domestic competition with an iron fist; both have undermined constitutional term limits. Such is their mutual esteem that in 2019, Xi publicly proclaimed, “President Putin is my best friend.”
Friendship ends in your own backyard
Despite all this, the friendship between China and Russia is not a love affair. If the interests are not complementary, cooperation quickly turns into competition. This becomes clear in the traditional spheres of influence of the two great powers.
Here, of all things, Xi’s prestige project could provide fuel for the fire: The New Silk Road runs right through Central Asia – a region that Russia regards as its own backyard. So far, Beijing has been mindful of that sensibility. When it opened a base in Tajikistan in 2016, it had consulted Moscow beforehand.
However, the New Silk Road projects have replaced Russia as the region’s main trading partner. According to UNCTAD calculations, China’s trade volume with Central Asian states amounted to $46.47 billion in 2019, while Russia managed to turn over just $28.64 billion.
The situation is reversed around the South China Sea, where Beijing is keeping a wary eye on Russia’s discreet restraint – despite Moscow’s traditionally good relations with states such as Vietnam.
The first signs of disgruntlement, on the other hand, can be seen in the race for the Arctic, where Russia, as an Arctic littoral state, is suspicious of Beijing’s ambitions as a self-proclaimed “state close to the Arctic”.
Distrustful distance
In the military areajoint maneuvers are increasing, but here too, a distrustful distance still prevails. Until the last decade, Moscow was able to profitably sell not-so-up-to-date equipment such as SU-35 jets or S-400 rockets to Beijing. But China has caught up – and is only interested in the latest technologies. Putin, however, has repeatedly made it clear that he is not prepared to share Moscow’s military silverware with his supposed friends from Beijing. And even in less sensitive areas such as civil aviation, little has so far come of grandiose announcements.
China is also keeping its distance accordingly. When Putin publicly refused to rule out an alliance with China last October, Beijing politely declined. “Military alliances were part of the Cold War,” Cheng Yijun told the South China Morning Post. A Sino-Russian military alliance would drag Beijing into conflicts where it had no interests of its own, the Chinese Academy of Social Sciences scholar said, explaining the Chinese rejection.
Pragmatic realpolitik instead of ‘socialist brother states’ alliance
The broad cooperation between Moscow and Beijing shows that the concerns of Merkel and Maas are entirely justified. Just as the West was imposing sanctions over the Crimean annexation in 2014, construction of the “Power of Siberia” pipeline began. Russia is turning east under Putin.
However, a firm alliance or, as in the past, an ideological front, when they called themselves “socialist brother states”, has not emerged. Rather, it is a matter of pragmatic realpolitik.
The supposed friends in the east still complement each other. But China’s rise already threatens conflict. Russia’s pride and its self-perception as a great power will be difficult to reconcile in the long term with its position as China’s junior partner.
Telecoms equipment maker Huawei sees dealing with US sanctions as mainly a race against time. The company confirmed it had bought up chips before the trade restrictions took effect in the market, which it has used to keep production going so far. “We expect that our new partners will be able to supply the chipsets we need in the foreseeable future,” board member Eric Xu said Monday at the annual presentation of the group’s strategy in Shenzhen. “We now hope our inventories will last until that point is reached.”
As usual for Huawei presentations, Xu did not spare dramatic words to describe the group’s distress:“Our goal is first to survive at all.” He said the company had jettisoned all hope that the US would return to a conciliatory course toward China. “And we can’t base our business strategy on illusions and unrealistic hopes.” Huawei said it expects to have to adjust to being on the US blacklist in the longer term.
In May 2019, then US President Donald Trump had placed Huawei on the “Entity List” of dangerous foreign companies with which suppliers are not allowed to do business without fearing the wrath of the government in Washington. That was a harsh blow: Huawei indeed develops a good portion of its own electronics. But a whole series of particularly sophisticated chips come fromsuppliers. This is quite normal; German, South Korean, or Japanese technology companies also rely on the skills of their international partners. For Huawei, the ban means that it will no longer be able to manufacture part of its product range.
The USA forces China to catch up
Xu acknowledged that the global shortage of microchips is in good part the result of Chinese companies’ response to the US attacks. “Many companies are now holding inventories for half a year.” The sanctions against Huawei and other well-known Chinese firms have spread considerable nervousness in the industry. That has led to hoarding purchases ofsemiconductor elements. Previously, the industry had relied on short delivery times.
Xu now expects a monumental boost to China’s tech self-reliance: “Thanks to the huge surge in domestic demand, companies will step into the breach to invest accordingly and meet the needs of Huawei and the other Chinese companies.”
Huawei had been the third-largest single buyer of mobile chipsets after Apple and Samsung before the sanctions, so it can exert considerable market power. In addition, the industry as a whole is looking to diversify to more different vendors than before – including in Europe and other Asian countries. He sees a wave of investment rolling in.
Xu, therefore, considers the damage caused by the US sanctions to be an own goal. He says that the ongoing shortage has damaged confidence in the chip industry’s performance.This is a direct result of the disruptions caused by the erratic US trade policy. Even Germany, France, and other European countries are now putting pressure on themselves to become less dependent on semiconductor imports – and are likely to order less from America in the future. For now, Xu does not expect US President Joe Biden to fundamentally change policy. “In the end, the end customers will pay the bill through price increases for electronics,” Xu warned.
No car planned under own brand
In his optimism about the production shift, Eric Xu did not mention that the complexity of the required components prevents alternatives from coming to market quickly. The most technically advanced components in particular also enjoy tight patent protection. Xu, who is also currently taking on the role of CEO at Huawei in rotation, was also less than specific about numbers and timeframes during his remarks. He didn’t say exactly when the alternatives might arrive – nor how long Huawei’s stock will last.
He also declined to quantify the damage to sales caused by US policy. By the end of 2020, smartphone sales had fallen to 2017 levels. Meanwhile, Huawei’s main business of equipment for telecom companies benefited from the 5G rollout in a number of major markets. These include China and Indonesia, for example. As a result, the company is still making a profit.
The second big topic at the Q&A session for analysts and journalists was Huawei’s plans for self-driving cars. The company has been developing chips and software for autonomous driving since 2012. After competitor Xiaomi announced plans to release cars under its own brand, Chinese media were now curious about Huawei’s reaction. However, Xu clarified that his company has no plans to move into the end-user market for product groups beyond mobile phones. “We see our role as enabling business partners in the auto industry to push into autonomous driving”. That is a “wise strategy” that better suits Huawei’s role.
It is a broad cirlce that has met in Vienna. Representatives of China, France, Germany, Russia, the United Kingdom, and Iran discussed a possible US return to the Iran nuclear deal (JCPOA) in a first round of negotiations until last Friday Aljazeera television described the progress of the talks as “hopeful”.
There have been no direct negotiations between the US and Iran yet. However, US President Joe Biden had stated that the US was open to a return. First, however, Tehran would have to comply with all the restrictions of the pact.
A no-win situation for everyone involved
US special envoy Robert Malley said Iran was continuing to store uranium and experiment with advanced nuclear technology while restricting access by International Atomic Energy Agency (IAEA) experts. Iran had resumed enriching fissile material when then-US President Donald Trump pulled out of the deal in 2018, although the IAEA said Iran had complied with all conditions at the time. So now Iran, for its part, is demanding that the Americans act first. “Iran will resume full compliance with its obligations under the agreement if the US lifts its sanctions against Iran,” President Hassan Rohani said. The question now is who will make the first move.
It remains to be seen whether Biden will get a majority in the US Congress for this, as his democratic predecessor and friend Barack Obama did. Only then could he lift the sanctions against Iranian banks,which were tightened again last autumn.
China undermines sanctions
Meanwhile, China is already moving to undermine US Iran sanctions.
In March this year alone, Beijing’s oil imports rose to a new high. While China imported an average of 2.2 million tons of oil in 2020, the figure was already 3.75 million tons in March. In January, imports were already at 3.37 million tons.
To keep the affront from becoming too great, the money for the oil is not transferred to Iran, but remains in escrow accounts in China. In addition, the Chinese tankers loading Iranian oil are turning off their transponders. This means that their signals can no longer be picked up by satellites. However, the Americans can, of course, still track the ships on image satellites. In addition, the cargo is also transhipped on its way to China, and some of it is briefly sold to third countries in the process.
So far, at least, the Americans are doing nothing about it. Political observers conclude that Washington is preparing to allow the agreement to come back into force. But it may also be because America’s oil imports from Russia have been rising sharply since 2018. In 2020, the US imported more oil from Russia than from Saudi Arabia. However: Like Iran, the US has actually imposed sanctions on Russia.
In addition to the renewed oil trade, Iran and China signed a 25-year cooperation agreement on March 26. The “Strategic Cooperation Agreement” is being hailed as a comprehensive deepening of Sino-Iranian relations. According to it, China could invest between $400 billion and $800 billion in Iran. However, both sides immediately made it clear that the plan did not contain any “quantitative, specific contracts” so far and should rather be seen as a “non-binding document”. Chinese Foreign Ministry spokesman Zhao Lijian said the day after the signing that the overall strategic agreement between China and Iran “will provide a general framework for future cooperation between China and Iran.” Obviously, they don’t want to provoke the Americans any further.
Nevertheless, the development is obvious – and it increases the pressure on the Europeans to act. Because they too are interested in close economic relations with Iran.
Diplomatic success of the new world order
The 2015 international agreement is still seen by the remaining parties to the treaty – Russia, China, Germany, France, and the United Kingdom – as an important milestone in curbing the global spread of nuclear weapons and reintegrating Iran, a regional power, more firmly into the global community.
Never before have Beijing and Berlin, with the support of the Russians, the French, and the British, cooperated so closely to convince the Americans to take such a step. President Obama finally agreed.
Fixing Trump’s mistakes
Donald Trump, however, unilaterally terminated the agreement in May 2018, calling it the “worst deal ever”. It was a thorn in his side that majorities had formed globally against the US. But his policy only led China and the EU to oppose him even more clearly.
Even then, the EU did not want to support Trump’s sanctions and his strategy of “maximum pressure”. The thinking in Beijing is similar. There, the deal remains an “important pillar” for stability and peace in the Middle East, as the Chinese Foreign Ministry explained.
Diplomat Wang Qun, who is now representing China at the negotiations in Vienna, reiterated Beijing’s stance, saying Washington’s “illegal sanctions” should be lifted. China has a saying, Wang said: “The one who ties the knot should also be the one who unties it.”
Lifting the sanction unilaterally imposed by the US would also ease tensions in another conflict. The reason for a trial in the Meng Wanzhou case, the daughter of Huawei founder Ren Zhengfei, would fall away without Biden coming off as too soft. Meng had been detained in Canada at the request of the US in late 2018. Washington accuses her of breaking US sanctions on Iran. The company and she vehemently deny that. If Meng is released, this would probably also apply to the two Canadians who were arrested by Beijing in return.
Beijing has a particular interest in seeing the nuclear deal revived. After all, China is Iran’s most important trading partner. Before the US pulled out of the international nuclear deal in 2018, China was the world’s largest buyer of Iranian oil. China has the second-highest oil consumption in the world and gets just over 50 percent of its imports from the Middle East.
Iran is also attractive to Beijing in another respect: The country offers a relatively untapped market for Chinese products and Chinese services. The current government in Tehran, however, does not have much time for negotiations. A new president will be elected in June. Incumbent Rohani may not run again after two terms. Rohani is in favor of reviving the nuclear deal. It is not so clear with his possible successors. Against Rohani’s wishes, Tehran’s parliament passed a law in January ordering the Islamic Republic’s authorities to ramp up uranium enrichment from about four percent to 20 percent. The hardliners are getting into position.
Iran
Meng Wanzhou
Raw materials
News
EU decides on further aluminum tariffs
The EU will provisionallyimposeanti-dumping duties on aluminum flat-rolled products from China. They will apply from Tuesday and amount to between 19.3 and 46.7 percent. The reason for the levies is a preliminary investigation by the EU, according to which Chinese producers are alleged to have sold aluminum products such as sheet, plate and foil to the EU at artificially low prices. The cost of raw materials, energy, and labor to produce said aluminum products was “not the result of free market forces” and was “influenced by significant state interference“, the EU investigation said. It stems from a complaint by the trade association European Aluminium.
Flat-rolled aluminum products are used in a wide range of applications in the construction sector, technical applications, as well as in transport sector, and consumer goods industry.
According to Reuters, the investigation is to be concluded in October. It will then be decided whether the EU duties will be imposed for a period of five years. At the end of March, the EU Commission had already imposed anti-dumping duties on aluminum extrusions from China. nib
Metals
Raw materials
Forced labor in Xinjiang – charges filed in France against clothing manufacturer
Several non-governmental organizations (NGOs), together with an Uyghur woman, have filed a complaint inFranceagainst four multinational clothing companies. Specifically, the complaint concerns Inditex (owner of the brands Zara, Bershka, among others), Uniqlo, SMCP (Sandro, Maje, among others), and the sports shoe manufacturer Skechers. They allegedly profited from forced labor of the Muslim minority in China (China.Table reported). The complaint filed by the anti-corruption association Sherpa and the European Uyghur Institute (EUI) talks about “concealment of forced labor and crimes against humanity”.
The organizations cite a March 2020 report by the Australian NGO ASPI (Australian Strategic Policy Institute) that disclosed the use of Uyghurs as forced laborers. Now the plaintiffs are calling on the French judiciary to investigate the companies mentioned. They say they are still subcontracting, thereby accepting the production and marketing of cotton and cotton products produced under forced labor. In doing so, the companies are “complicit in the serious human rights crimes committed in Xinjiang,” Sherpa and EUI said in a statement.
The complaint was filed in Paris and supported by French MEP Raphaël Glucksmann, among others. It was “a decisive step” in support of the minority, Glucksmann said on Monday. Lawyer William Bourdon, who is representing the complaint, told the AFP news agency legal action against clothing companies on the basis of accusations of concealment had not been taken in this form before in France. He called on the French judiciary to be “courageous” and “innovative”. ari
Fashion
Alibaba’s Ant Financial to be restructured
Alibaba already had to accept a hefty fine for violating the anti-monopoly law (China.Table reported) these days. On Monday, the second strike against the world’s largest online trading platform followed: Beijingordered the conversion of Alibaba’s financial arm Ant Financial into a normal financial holding company. This means that in the future, Ant Financial will be subject to the state financial supervisory authorities like a regular bank and will have to comply with stricter rules. This includes, for example, that Ant must maintain the same liquidity as a bank. This was announced by central bank vice director Pan Gongsheng after a meeting of China’s banking and securities regulators with Ant Group’s management in Beijing. Ant applied for the conversion as recently as Monday.
According to Pan, Ant must reduce the liquidity risks of its financial fund Yu’e Bao and the high risks of its financial services. Loans must henceforth be offered in accordance with government regulations on lending and data protection. The company must also stop “illegal” activities in loans, insurance, and asset management and eliminate “unfair competition” in its services.
Ant is the world’s largest fintech platform. The group operates Alipay, a ubiquitous mobile payment service in China, as well as a lending platform and insurance businesses. All of this is now under regulatory supervision. In addition, Ant is currently setting up a licensed credit reporting service. Ant will “return to its origins by focusing on micropayments and providing convenience to consumers and small businesses”, the Hangzhou-based company said. Just last weekend, China’s competition authorities imposed a record fine of ¥18 billion (€2.3 billion) on the group’s parent company Alibaba. The company had exploited its dominant market position to force retailers to offer their goods exclusively via Alibaba, according to the justification. Alibaba rejected that but accepted the fine and played down its significance on Monday. It was glad the matter was closed, Alibaba vice chairman Joe Tsai said, according to a report in the Hong Kong newspaper South China Morning Post – which is owned by Alibaba founder Jack Ma. Alibaba was satisfied that there was nothing wrong with “our business model of a platform company”, Tsai said.
Alibaba has been in the government’s sights since a critical speech by Jack Ma about financial authorities torpedoing Ant Financial’s IPO, among other things. Since then, it was unclear what would happen next with Ant. The penalty notice now clears the way for the planned listing, the value of which, however, is likely to be lower for the time being. Ingeneral, Beijing is currently tightening its control over the country’sfintech industry. ck
Alibaba
Ant Group
Finance
Jack Ma
Technology
Fewer Chinese want to buy ivory
The demand for ivory in China continues to decline. However, a small group still wants to hold on to the “white gold”. This is the result of a consumer survey conducted by the conservation organization WWF in cooperation with the research organization GlobeScan. According to the survey, only 19 percent of the people questioned in the People’s Republic intend to buy ivory in the future. As soon as they are made aware of the nationwide ban on ivory trade, it is even only 8 percent.
China’s government banned the purchase of ivory in 2017. At that time, 43 and 18 percent of respondents, respectively, said they wanted to purchase elephant tusks or products made from them. The numbers have more than halved since then. The survey involved 2,000 consumers in 15 cities across China over four years.
The WWF calls the new survey results an “encouraging development”. Only a month ago, the World Conservation Union IUCN upgraded Africa’s two elephant species on the International Red List. The African forest elephant is in immediate “danger of extinction”. The African savanna elephant is considered “critically endangered”.
“The fate of elephants is decided by ivory,” warns Dr. Arnulf Köhncke, head of species conservation at WWF Germany. The demand from Chinese ivory buyers is one of the main drivers of the global ivory trade. Therefore, the ivory ban issued in China in 2017 is a decisive step towards bringing demand to a halt. flee
Agriculture
Import
Trade
Knorr-Bremse invests in Dalian
Braking systems manufacturer Knorr-Bremse is investing in the expansion of its Chinese plant in Dalian in Liaoning province. According to the company, the Chinese subsidiaries Knorr-Bremse Commercial Vehicle Systems (Shanghai) Co., Ltd. and Knorr-Bremse Braking Systems for Commercial Vehicles (Dalian) Co., Ltd. together with Knorr-Bremse AG and the local government of Jinpu New District reached agreement in mid-March on the investment in Jinpu New District. The new plant is to replace the current plants. Constructionis scheduled tostart in June 2021. Production is targeted to start in December 2022. The bundling of research and development, manufacturing and testing facilities is expected to create 300 new jobs. bw
Car Industry
Industry
Tools
Regulations in the Export Control Act
Goods, technologies as well as services, and related technical data, documentation, etc., in the areas of military and nuclear products as well as dual-use goods, are subject to export controls.
It should be noted that export control applies not only to the transfer of controlled goods from China to foreign countries but also when such goods are made available by Chinese persons, legal entities, and other organizations to foreign persons or organizations within China – i.e., even without a cross-border transfer having taken place. The State Administration ofExport Control is responsible for export control.
List of goods concerned
A list of all goods and services subject to export control is published by the supervisory authority. In addition, the supervisory authority has the power to place non-listed goods and technology under export control on a temporary basis, but not for a period longer than two years.
Anapplication must be submitted to the supervisory authority for the export of goods and services subject to export control. The supervisory authority may prohibit exports in general or for certain countries and regions, or certain foreign persons or entities.
Listing of organizations and persons
In addition to the list of goods and services concerned, the supervisory authority shall also draw up a list of persons and entities in respect of which the supervisory authority may take specific measures, such as prohibiting and/or restricting trade in controlled goods or suspending exports of controlled goods.
Prohibitions and penalties
The law prohibits any person or organization from providing agency, freight and delivery services, financial services, customs declaration services, as well as e-commerce trading platform services to exporters conducting illegal exports.
Furthermore, China reserves the right in the law to take appropriate countermeasuresagainst any country or region that abuses export control regulations to endanger China’s national security and interests.
In the event of violations of the law, for example, by exporting prohibited goods or exporting without the appropriate permit, the law provides for criminal sanctions.
In addition, the law is also extraterritorially applicable. That is, if an organization or individual outside China violates the provisions of this law, thereby endangering China’snational security andinterests and hindering the fulfillment of international obligations, that person or organization may be held legally liable in China.
Legal implications
Exporters should thoroughly check the list of goods covered by export control to see whether their own goods are affected. In such a case, a corresponding export permit should be obtained immediately. The same applies to third parties who provide services for exporters in the course of the export. In any case, such service providers should always obtain confirmation from the exporter that the export of the goods concerned is not subject to export control or is permitted.
The implementation of the law in practice and the concrete effects and associated recommendations for action remain to be seen.
The author, Sebastian Wiendieck, is a lawyer and partner of Rödl & Partner GmbH Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft in Shanghai.
Chinese Communist Party
Geopolitics
Profile
Fabian von Heimburg
Founder Hotnest Technology
2020 was “personally his best year” for his start-up Hotnest, says Fabian von Heimburg. The 32-year-old Munich-based marketing technology provider does not want to give exact figures. However, he says that sales increased by 200 percent. Like many other digital companies, Hotnest benefited from the fact that the COVID-19 pandemic accelerated digitization. “We offer data-based solutions for consumer brand growth in China,” says von Heimburg, “that’s what everyone wants right now”.
After studying at the London School of Economics, Fabian von Heimburg went to China in 2014 to set up something of his own. Not an easy path. Together with his Chinese fellow student Qing Mu, he started from scratch: “We were young and naive,” he says, “we had nothing but our vision. No technology, no network, no market knowledge.” As a foreigner in the Chinese start-up scene, he is still exotic. Several times, the young company was on the verge of bankruptcy. And although von Heimburg learned Mandarin for up to twelve hours a day, he almost didn’t understand his employees for the first two years. Today he speaks the language fluently.
Fabian von Heimburg as an exotic in an unknown land
Why didn’t he just move to Berlin or Silicon Valley for his start-up? “I’ve always been fascinated by foreign cultures. And China is completely different from everything I knew in that respect.” He first got to know China better during a semester abroad in Beijing in 2011. The country with its long history, he suspected at the time, “has incredible potential”. Today, this desire to understand another country is still his main motivation.
Now Hotnest has 40 employees, is profitable, and growing fast. More than a dozen self-developed algorithms search the Chinese consumer internet to help consumer brands scale automatically. It tracks up to 40 Chinese platforms such as Wechat and Weibo – hundreds of millions of data points in total. The software also aggregates and manages several thousand agencies. Thanks to the technology, marketing for the entire value chain is covered: from the launch to the sale of products.
Hotnest was supposed to expand to Europe in 2020 to better connect the two markets. However, because of the COVID-19 pandemic, von Heimburg postponed the office opening until 2021. In any case, he sees Europe as his second, more political mission: to further develop the start-up economy. That’s why he’s involved with the German Start-ups Association. “It frustrates me a lot to see how Europe is losing out in the digital race between the US and China.” He says the EU doesn’t have a functioning, independent start-up ecosystem like the US and China. You would actually have to invest €100 billion here every year to become more independent, von Heimburg says. Fortunately, things are finally starting to move. “This is where I want to bridge the gap with my experience and knowledge.” Adrian Meyer
E-commerce
Technology
Trade
Dessert
“There are eggs!!!” In Beijing’s Dongcheng district on Monday, the nutritious farm products are handed out next to a vaccination station. However, not to everyone: You have to be over 60 – and get vaccinated against COVID.
