They could serve as de-risking paragons: Japan, South Korea and Taiwan have been working on minimizing their China risks for years. After all, they all share the experience of how China exploits economic dependencies to build up political pressure in the event of a conflict. A new study by Germany Trade & Invest (GTAI) has taken a closer look at the strategies of the three countries.
Their critical dependencies on China are primarily in the import of raw materials, pharmaceuticals and electronics, as Julia Fiedler describes. These countries have identified key strategic products in which they want to diversify – and are shifting procurement, production and investment for these products to other countries in the neighborhood, primarily Southeast Asia and India. China remains an important partner for them, but the country’s standing in trade and investment is declining.
Meanwhile, the global wind energy market has so far been fairly clearly divided: Western manufacturers dominate in the West, while domestic manufacturers have a near monopoly in China. Wind turbines are large, heavy and difficult to transport. Nevertheless, as Nico Beckert analyzes, Chinese wind turbine and rotor blade manufacturers set out to conquer the global markets. Like the photovoltaic industry, China has created massive capacities for wind turbines. European companies are increasingly worried.
To mark the occasion, we have a profile from the world of football for you in today’s issue: In 1994, Robert Gonnella, who was studying languages at the time, founded a football club in Beijing called Fortuna 94 – and even an international amateur football league, which still exists today. Fabian Peltsch has written down his story. And if you are surprised by the many Chinese names on the electronic advertising boards while watching the European Championship, you might be interested in our analysis on the topic. Back then, in January 2024, the UEFA had presented the EV manufacturer BYD as its new main mobility sponsor.
Taiwan, Japan and South Korea could serve as de-risking role models for Germany. The three countries have been working intensively on minimizing their China risks for years. The neighboring countries have often experienced how China exploits economic dependencies to build up political pressure. Due to their geographical proximity, they are also particularly threatened by China’s increasingly aggressive behavior in the Taiwan Strait.
Achim Haug, Head of East Asia at Germany Trade & Invest (GTAI), sees the long-term nature of the three countries’ de-risking as one of the biggest advantages and also an important lesson for Germany: “These countries have been diversifying for a long time, especially Japan. For Taiwan, the relationship with the mainland has also been complicated. One advantage these countries have today is that they have already established a good base and clusters in Southeast Asia. This means they have already mastered an important challenge that takes a lot of time.”
In a new study, GTAI has taken a closer look at the strategies of China’s neighbors. It reveals the following similarities:
China is Japan’s largest and most important trading partner: In 2023, China had a 20 percent share of Japan’s foreign trade. Interdependencies are particularly strong in the electronics and electrical engineering sector, where Japan imported almost half of all goods from the People’s Republic in 2023 and, conversely, supplied almost a quarter of its own products to China. Dependencies also exist in the supply of raw materials such as rare earths, pharmaceutical products, batteries and solar modules. As early as 2009, Japan adopted a strategy for securing rare earths to radically reduce dependencies. Imports from China declined from 90 percent in 2008 to less than 60 percent in 2012.
In 2021, Japan created a department for economic security, and in 2022, the core elements of Japan’s de-risking strategy were incorporated into an economic security law. One aspect of the law is supply chains. In order to diversify them, the country provided billions during the COVID-19 pandemic to promote investment in Southeast Asia and foreign investment in Japan. As part of the “Overseas Supply Chain Diversification Support Project,” a particularly large number of projects were implemented in Vietnam and Thailand, with others in Malaysia, the Philippines and other countries.
However, Japan also relies on strategic investments to de-risk. Companies investing in the production of critical products such as semiconductors and batteries can expect high subsidies. The supply of antibiotics, fertilizers and ship parts is also subsidized. The subsidy rates can sometimes reach half of the capital investment. Subsidies totaling billions are also available for research and development projects.
Over half of electrical engineering, 40 percent of electronics and more than a third of chemical products: South Korea sources many key products mainly from China. Its neighbor is also the biggest sales market: More than a third of electronics, chemical products and measurement and control technology exports go to the People’s Republic. As a result, the countries are closely intertwined. The dependencies are dangerously high for some products, such as nickel-cobalt-manganese precursors, which are used in battery production. 98.6 percent of them come from the People’s Republic.
In late 2023, the government in Seoul announced a supply chain strategy with a focus on 185 critical products that account for more than 70 percent of imports, in some cases even over 90 percent. The goal is to reduce their dependence on imports to a maximum of 50 percent by 2030, which is why the strategy is also known as the “3050 Strategy.” The country has identified 1,700 products, of which over 50 percent come from just one country – not exclusively, but very often, from China.
At the heart of the strategy are achieving self-sufficiency, diversifying imports and securing raw materials. Among other things, an early warning system and a response system are to be set up in the event of a crisis, as well as public stocks of essential raw materials. Research and development budgets for nuclear technologies will be increased. South Korea is also intensifying its cooperation with other countries, including the EU, to secure supply chains for batteries and semiconductors.
A clear shift can be seen in South Korea’s foreign direct investment. China has lost considerable importance in recent years, and South Korean companies are increasingly withdrawing. In contrast, the country’s direct investments in the USA have more than doubled since 2018, mainly in the semiconductor and battery sectors.
While investment from China in Taiwan is strictly limited, Taiwan’s investment in China has been significant over the past 30 years. Between 1991 and 2023, the Investment Commission of the Taiwanese Ministry of Economic Affairs approved around 206 billion US dollars – just over 50 percent of all Taiwanese foreign direct investment (FDI). Since 2022 in particular, however, China’s share of Taiwanese FDI has fallen rapidly, from 33.6 percent to 11.4 percent. At the same time, investments channeled to the United States have increased from 7 to 36 percent.
The share of so-called “new southbound countries” in Taiwan’s FDI has also risen steadily, accounting for almost 21 percent in 2023. In an attempt to diversify and stabilize its supply chains, the government in Taipei has launched the “New Southbound Policy” program, which covers 18 countries in South and Southeast Asia, including smaller countries such as Bhutan, industrial hotspots such as Thailand and Indonesia, and Australia. What is unique in Taiwan’s case is that some large companies are also considering setting up second headquarters in Southeast Asia in order to remain operational in the event of a Chinese invasion.
Taiwan also promotes so-called reshoring. Incentive programs such as the “Action Plan for Welcoming Overseas Taiwanese Businesses to Return to Invest in Taiwan” should encourage Taiwanese companies that have invested in China to bring parts of their production back to Taiwan. With success: By March 2024, the investment volume had already totaled around 70 billion US dollars and over 1400 companies had submitted applications. Meanwhile, Taiwan controls outbound investment toward China in its key industries, such as electronics and chip manufacturing, and limits the number of company sites, technical standards and collaborations.
The three neighbors are important trading partners for China. Despite all the political tensions, Beijing is trying to promote economic cooperation by lowering trade barriers in its own country and making it easier to do business; it is also a member of the huge Asian free trade region RCEP, as are Japan and South Korea. China is also dependent, says Achim Haug. “Taiwan, Japan and South Korea continue to be important partners for China, on which it is particularly dependent in the electronics sector. In addition to semiconductors, this also includes machines, chemicals and materials needed in the semiconductor sector.”
Over the weekend, the trade dispute between Europe and China showed initial signs of easing. During Economy Minister Robert Habeck’s trip to China, the EU and China agreed to new talks regarding the EU’s protective tariffs on electric vehicle imports from China. This development is considered a success for Habeck.
However, current developments in the wind industry could lead to new trade conflicts in the future. China has built massive production capacities in the wind sector, bolstered domestic companies with subsidies and shielded them from foreign competition. The industry is increasingly targeting the global market, threatening to take market share from Western manufacturers. Increased competition and lower prices would benefit the energy transition in developing and emerging countries but could further squeeze the profits of Western manufacturers.
The global wind energy market is currently quite segmented: Western manufacturers dominate in the West, while domestic manufacturers hold an almost monopoly in China. Due to the large domestic market, four of the five largest manufacturers worldwide are from China. “Chinese wind turbine manufacturers are massively expanding and trying to push their overcapacity onto international markets,” says a spokesperson for Wind Europe, the European wind energy association, to Table.Briefings.
This expansion involves some unusual alliances: “Well-funded Chinese and Arab energy companies are now building massive wind power capacities with Chinese-made turbines across developing countries,” write analysts from the consulting firm Trivium China.
Many Chinese suppliers are expanding abroad, setting up production facilities or planning to do so:
So far, China has not made significant inroads into the European and US markets. However, “in their expansion, Chinese wind turbine manufacturers are also trying to gain a foothold in the European market,” observes Wind Europe. The association cautions: The dependence on Russian gas should “definitely not be repeated with clean tech from China. The production of wind turbines in Europe is also a matter of our energy security – and ultimately our national security.”
Chinese wind turbine manufacturers have significant advantages in the global market:
These cost advantages make wind power increasingly attractive for emerging and developing countries. The growing presence of Chinese suppliers “on global markets has the potential to significantly reduce the costs of wind turbines worldwide,” say Trivium China analysts.
China’s wind turbine manufacturers owe their competitive advantages to the country’s industrial and trade policies. While Western manufacturers had a 70 percent market share in China in the 2000s, they have been nearly completely displaced by subsidies for domestic producers and requirements to use locally made goods. Today, Chinese manufacturers share 99.8 percent of the domestic market.
High demand has allowed Chinese manufacturers to achieve cost-effective mass production with significant economies of scale. Additionally, Chinese manufacturers have caught up with and surpassed Western manufacturers in the size of their turbines in recent years. In the offshore sector, the first turbines with a capacity of 18 megawatts (MW) are being installed, while the 10-MW mark has been surpassed onshore. Larger turbines allow for more wind power to be installed on less land, requiring fewer turbines to equip a wind farm with a certain capacity, resulting in cost and time savings.
However, there are also overcapacities in the Chinese wind energy market, leading to a “brutal price war”, according to Trivium China analysts. The race for the largest wind turbines “could prove to be unsustainable“, say analysts from the energy consulting firm Wood Mackenzie. While Chinese manufacturers are still profitable, “declining prices could lead to a profit crisis for Chinese wind companies,” according to Wood Mackenzie analysts. This is another reason for them to target the global market.
Western manufacturers have been in a profit crisis for some time. “Supply chain disruptions, rising raw material prices, geopolitical tensions, and quality issues” have affected Western manufacturers. Their production capacities are insufficient to meet rising global demand. Due to low profitability, investments in new factories are challenging. Chinese manufacturers see this as a “unique opportunity” to gain global market share. They can leverage their financial power and the massive size of their domestic supply chain to challenge Western manufacturers in developing and emerging markets, according to Wood Mackenzie experts.
However, it is unlikely that China will achieve dominance in the wind sector similar to that in photovoltaics. Logistics are more complicated with bulky wind turbines, and turbines require on-site maintenance. “European manufacturers have established high-quality service and maintenance structures over the years. Chinese manufacturers have not yet built these structures or earned customer trust,” says the German Wind Energy Association (BWE) to Table.Briefings.
Sinolytics is a research-based business consultancy entirely focused on China. It advises European companies on their strategic orientation and specific business activities in the People’s Republic.
Robert Gonnella had no idea that he would write Chinese football history when he came to Beijing in 1994 at the age of 26. A forwarding agent by training from Duesseldorf, he had secured a scholarship to study Chinese and logistics. But he didn’t want to be completely without football in a foreign country. Even when he was still in Japan, where he had previously worked for two years at the freight forwarding company “Nippon Express,” he founded a hobby team with friends called “Fortuna 1993 Tokyo,” a nod to his home club. “So it was only natural for me to set up a team in Beijing too,” the 55-year-old says.
In the 1990s, China tried harder than ever to become a football nation, with Europe as a role model. At that time, the Chinese had just failed to qualify for the 1994 World Cup in the USA, losing somewhat shamefully in the preliminary round of qualifying for Asian countries. Despite all the money invested in beautiful jerseys and top foreign players, the grassroots work was severely lacking. At the time, there were only the first and second Chinese leagues, no official amateur leagues. The rent for sports fields was too high for amateur athletes, Gonnella recalls. Showers and floodlights were usually not even included in the pitch fees.
It was a gap that the pony-tailed idealist quickly filled. He founded Fortuna Beijing in the same year he arrived. Still living in a dormitory then, he found his teammates via notices on the bulletin board. F94, as it is abbreviated, is a multicultural bunch; Russians, Arabs, Nepalese, French, Japanese, English, Chinese, Palestinians and Germans play together. To create a framework and incentive, Gonnella created an “International Friendship Football League,” as he had done in Japan before. The opponents initially consisted mainly of teams of embassy staff and other expats, who had already played loosely against each other before, but now compete against each other in ten teams in back-and-forth matches. There were even plans for a Super Cup.
Robert Gonnella was studying for a degree in logistics and transportation at Peking University on the side. But football quickly became a full-time job for him. More and more Chinese people started playing, including rock musician Cui Jian and his team, Red Star. When things got relatively big in 1996, with an average of 200 spectators, the Chinese Football Association contacted Gonnella – initially, however, to inform him that his league was illegal.
However, the association also recognized the opportunities of an international team on Chinese soil – and officially allowed Gonnella to integrate his league into the Chinese Football Association. The “International Friendship Football Club” (IFFC), as it is now called, is also used to train football coaches who learn about international customs, such as sidetacking, which was previously frowned upon in China. Cultural mediation generally plays a crucial role in Gonnella’s venture.
“Certain mentalities clashed,” he recalls. “Some South Americans, for example, had a habit of standing in front of their opponent when they were angry and shouting in the other player’s face from 10 centimeters away. For Koreans and Japanese, but also for the Chinese, that was like a punch. Or whenever an Englishman shouted ‘fuck,’ they were kicked out at first because the referee interpreted it as a personal insult, when it was simply an expression like ‘shit’.”
At its peak in the 1990s, Gonnella’s league had 1,000 members from over 80 nations: three men’s leagues, a women’s league and a youth league. At the time, it was China’s largest amateur association in terms of membership. As league manager, Gonnella published his own IFFC newspaper and organized the match schedule, referees and pitches. Everything was still done “old school” by fax. Gonnella’s own team, the all-star team “Zebras,” was also allowed to play in the official promotion playoffs to the second Chinese league. Unfortunately, they were not allowed to move up themselves “because we were not a Chinese club.”
Like the football coach Klaus Schlappner, who was also active in China at the time, Gonnella became a kind of German sports ambassador – his proficiency in Chinese literally opened doors for him. When Franz Beckenbauer’s publishing house wanted to position his autobiography on the Chinese market, Gonnella organized television appearances and autograph sessions in 1997. However, he not only met footballers, but also artists and officials. “The 1990s were a golden age in China. Back then, many things were possible that are unthinkable today.”
When the 2008 Olympics in Beijing approached, regulations became tougher. “More high-tech, more cameras, more pressure. A lot of things became more difficult for foreigners, too.” In 2011, Gonnella returned home after 18 years in China to look after his mother. In the meantime, he married a Chinese woman from Tianjin. Their son will attend school in Germany, where there is a little less pressure.
Today, Robert Gonnella is once again devoting himself to his other great passion: music. Before moving to Asia, he played in the heavy metal band Assassin, which today is considered one of the pioneers of the extreme thrash metal genre. This is where he got his nickname, Raging Rob, which is also the name of his current band project.
He visits China regularly; his son, who is raised bilingually, has just visited the country for the first time. The league he founded still exists. It even holds its own “Gonnella Cup” in his honor. However, Gonnella believes the reason why football is still not a popular sport in China is partly due to the strict educational methods. “Chinese football has never really been accepted by society. Everyone wants Chinese football to progress, but nobody wants to offer up their children for it. They are expected to get a good education and are sent to countless tutoring lessons. Unfortunately, football is not one of the disciplines they learn there.” Fabian Peltsch
Heavy rain events are also increasing in China. Shanghai expected a heavy rainstorm on Tuesday. The port city has issued a warning as the storm, accompanied by heavy thunderstorms, is approaching from the south. There, in the coastal provinces of Fujian and Guangdong, heavy rainfall caused severe flooding last week. And yet, some people in Shanghai’s Lujiazui financial district dare to step outside to photograph the dark gray wispy clouds between the skyscrapers.
They could serve as de-risking paragons: Japan, South Korea and Taiwan have been working on minimizing their China risks for years. After all, they all share the experience of how China exploits economic dependencies to build up political pressure in the event of a conflict. A new study by Germany Trade & Invest (GTAI) has taken a closer look at the strategies of the three countries.
Their critical dependencies on China are primarily in the import of raw materials, pharmaceuticals and electronics, as Julia Fiedler describes. These countries have identified key strategic products in which they want to diversify – and are shifting procurement, production and investment for these products to other countries in the neighborhood, primarily Southeast Asia and India. China remains an important partner for them, but the country’s standing in trade and investment is declining.
Meanwhile, the global wind energy market has so far been fairly clearly divided: Western manufacturers dominate in the West, while domestic manufacturers have a near monopoly in China. Wind turbines are large, heavy and difficult to transport. Nevertheless, as Nico Beckert analyzes, Chinese wind turbine and rotor blade manufacturers set out to conquer the global markets. Like the photovoltaic industry, China has created massive capacities for wind turbines. European companies are increasingly worried.
To mark the occasion, we have a profile from the world of football for you in today’s issue: In 1994, Robert Gonnella, who was studying languages at the time, founded a football club in Beijing called Fortuna 94 – and even an international amateur football league, which still exists today. Fabian Peltsch has written down his story. And if you are surprised by the many Chinese names on the electronic advertising boards while watching the European Championship, you might be interested in our analysis on the topic. Back then, in January 2024, the UEFA had presented the EV manufacturer BYD as its new main mobility sponsor.
Taiwan, Japan and South Korea could serve as de-risking role models for Germany. The three countries have been working intensively on minimizing their China risks for years. The neighboring countries have often experienced how China exploits economic dependencies to build up political pressure. Due to their geographical proximity, they are also particularly threatened by China’s increasingly aggressive behavior in the Taiwan Strait.
Achim Haug, Head of East Asia at Germany Trade & Invest (GTAI), sees the long-term nature of the three countries’ de-risking as one of the biggest advantages and also an important lesson for Germany: “These countries have been diversifying for a long time, especially Japan. For Taiwan, the relationship with the mainland has also been complicated. One advantage these countries have today is that they have already established a good base and clusters in Southeast Asia. This means they have already mastered an important challenge that takes a lot of time.”
In a new study, GTAI has taken a closer look at the strategies of China’s neighbors. It reveals the following similarities:
China is Japan’s largest and most important trading partner: In 2023, China had a 20 percent share of Japan’s foreign trade. Interdependencies are particularly strong in the electronics and electrical engineering sector, where Japan imported almost half of all goods from the People’s Republic in 2023 and, conversely, supplied almost a quarter of its own products to China. Dependencies also exist in the supply of raw materials such as rare earths, pharmaceutical products, batteries and solar modules. As early as 2009, Japan adopted a strategy for securing rare earths to radically reduce dependencies. Imports from China declined from 90 percent in 2008 to less than 60 percent in 2012.
In 2021, Japan created a department for economic security, and in 2022, the core elements of Japan’s de-risking strategy were incorporated into an economic security law. One aspect of the law is supply chains. In order to diversify them, the country provided billions during the COVID-19 pandemic to promote investment in Southeast Asia and foreign investment in Japan. As part of the “Overseas Supply Chain Diversification Support Project,” a particularly large number of projects were implemented in Vietnam and Thailand, with others in Malaysia, the Philippines and other countries.
However, Japan also relies on strategic investments to de-risk. Companies investing in the production of critical products such as semiconductors and batteries can expect high subsidies. The supply of antibiotics, fertilizers and ship parts is also subsidized. The subsidy rates can sometimes reach half of the capital investment. Subsidies totaling billions are also available for research and development projects.
Over half of electrical engineering, 40 percent of electronics and more than a third of chemical products: South Korea sources many key products mainly from China. Its neighbor is also the biggest sales market: More than a third of electronics, chemical products and measurement and control technology exports go to the People’s Republic. As a result, the countries are closely intertwined. The dependencies are dangerously high for some products, such as nickel-cobalt-manganese precursors, which are used in battery production. 98.6 percent of them come from the People’s Republic.
In late 2023, the government in Seoul announced a supply chain strategy with a focus on 185 critical products that account for more than 70 percent of imports, in some cases even over 90 percent. The goal is to reduce their dependence on imports to a maximum of 50 percent by 2030, which is why the strategy is also known as the “3050 Strategy.” The country has identified 1,700 products, of which over 50 percent come from just one country – not exclusively, but very often, from China.
At the heart of the strategy are achieving self-sufficiency, diversifying imports and securing raw materials. Among other things, an early warning system and a response system are to be set up in the event of a crisis, as well as public stocks of essential raw materials. Research and development budgets for nuclear technologies will be increased. South Korea is also intensifying its cooperation with other countries, including the EU, to secure supply chains for batteries and semiconductors.
A clear shift can be seen in South Korea’s foreign direct investment. China has lost considerable importance in recent years, and South Korean companies are increasingly withdrawing. In contrast, the country’s direct investments in the USA have more than doubled since 2018, mainly in the semiconductor and battery sectors.
While investment from China in Taiwan is strictly limited, Taiwan’s investment in China has been significant over the past 30 years. Between 1991 and 2023, the Investment Commission of the Taiwanese Ministry of Economic Affairs approved around 206 billion US dollars – just over 50 percent of all Taiwanese foreign direct investment (FDI). Since 2022 in particular, however, China’s share of Taiwanese FDI has fallen rapidly, from 33.6 percent to 11.4 percent. At the same time, investments channeled to the United States have increased from 7 to 36 percent.
The share of so-called “new southbound countries” in Taiwan’s FDI has also risen steadily, accounting for almost 21 percent in 2023. In an attempt to diversify and stabilize its supply chains, the government in Taipei has launched the “New Southbound Policy” program, which covers 18 countries in South and Southeast Asia, including smaller countries such as Bhutan, industrial hotspots such as Thailand and Indonesia, and Australia. What is unique in Taiwan’s case is that some large companies are also considering setting up second headquarters in Southeast Asia in order to remain operational in the event of a Chinese invasion.
Taiwan also promotes so-called reshoring. Incentive programs such as the “Action Plan for Welcoming Overseas Taiwanese Businesses to Return to Invest in Taiwan” should encourage Taiwanese companies that have invested in China to bring parts of their production back to Taiwan. With success: By March 2024, the investment volume had already totaled around 70 billion US dollars and over 1400 companies had submitted applications. Meanwhile, Taiwan controls outbound investment toward China in its key industries, such as electronics and chip manufacturing, and limits the number of company sites, technical standards and collaborations.
The three neighbors are important trading partners for China. Despite all the political tensions, Beijing is trying to promote economic cooperation by lowering trade barriers in its own country and making it easier to do business; it is also a member of the huge Asian free trade region RCEP, as are Japan and South Korea. China is also dependent, says Achim Haug. “Taiwan, Japan and South Korea continue to be important partners for China, on which it is particularly dependent in the electronics sector. In addition to semiconductors, this also includes machines, chemicals and materials needed in the semiconductor sector.”
Over the weekend, the trade dispute between Europe and China showed initial signs of easing. During Economy Minister Robert Habeck’s trip to China, the EU and China agreed to new talks regarding the EU’s protective tariffs on electric vehicle imports from China. This development is considered a success for Habeck.
However, current developments in the wind industry could lead to new trade conflicts in the future. China has built massive production capacities in the wind sector, bolstered domestic companies with subsidies and shielded them from foreign competition. The industry is increasingly targeting the global market, threatening to take market share from Western manufacturers. Increased competition and lower prices would benefit the energy transition in developing and emerging countries but could further squeeze the profits of Western manufacturers.
The global wind energy market is currently quite segmented: Western manufacturers dominate in the West, while domestic manufacturers hold an almost monopoly in China. Due to the large domestic market, four of the five largest manufacturers worldwide are from China. “Chinese wind turbine manufacturers are massively expanding and trying to push their overcapacity onto international markets,” says a spokesperson for Wind Europe, the European wind energy association, to Table.Briefings.
This expansion involves some unusual alliances: “Well-funded Chinese and Arab energy companies are now building massive wind power capacities with Chinese-made turbines across developing countries,” write analysts from the consulting firm Trivium China.
Many Chinese suppliers are expanding abroad, setting up production facilities or planning to do so:
So far, China has not made significant inroads into the European and US markets. However, “in their expansion, Chinese wind turbine manufacturers are also trying to gain a foothold in the European market,” observes Wind Europe. The association cautions: The dependence on Russian gas should “definitely not be repeated with clean tech from China. The production of wind turbines in Europe is also a matter of our energy security – and ultimately our national security.”
Chinese wind turbine manufacturers have significant advantages in the global market:
These cost advantages make wind power increasingly attractive for emerging and developing countries. The growing presence of Chinese suppliers “on global markets has the potential to significantly reduce the costs of wind turbines worldwide,” say Trivium China analysts.
China’s wind turbine manufacturers owe their competitive advantages to the country’s industrial and trade policies. While Western manufacturers had a 70 percent market share in China in the 2000s, they have been nearly completely displaced by subsidies for domestic producers and requirements to use locally made goods. Today, Chinese manufacturers share 99.8 percent of the domestic market.
High demand has allowed Chinese manufacturers to achieve cost-effective mass production with significant economies of scale. Additionally, Chinese manufacturers have caught up with and surpassed Western manufacturers in the size of their turbines in recent years. In the offshore sector, the first turbines with a capacity of 18 megawatts (MW) are being installed, while the 10-MW mark has been surpassed onshore. Larger turbines allow for more wind power to be installed on less land, requiring fewer turbines to equip a wind farm with a certain capacity, resulting in cost and time savings.
However, there are also overcapacities in the Chinese wind energy market, leading to a “brutal price war”, according to Trivium China analysts. The race for the largest wind turbines “could prove to be unsustainable“, say analysts from the energy consulting firm Wood Mackenzie. While Chinese manufacturers are still profitable, “declining prices could lead to a profit crisis for Chinese wind companies,” according to Wood Mackenzie analysts. This is another reason for them to target the global market.
Western manufacturers have been in a profit crisis for some time. “Supply chain disruptions, rising raw material prices, geopolitical tensions, and quality issues” have affected Western manufacturers. Their production capacities are insufficient to meet rising global demand. Due to low profitability, investments in new factories are challenging. Chinese manufacturers see this as a “unique opportunity” to gain global market share. They can leverage their financial power and the massive size of their domestic supply chain to challenge Western manufacturers in developing and emerging markets, according to Wood Mackenzie experts.
However, it is unlikely that China will achieve dominance in the wind sector similar to that in photovoltaics. Logistics are more complicated with bulky wind turbines, and turbines require on-site maintenance. “European manufacturers have established high-quality service and maintenance structures over the years. Chinese manufacturers have not yet built these structures or earned customer trust,” says the German Wind Energy Association (BWE) to Table.Briefings.
Sinolytics is a research-based business consultancy entirely focused on China. It advises European companies on their strategic orientation and specific business activities in the People’s Republic.
Robert Gonnella had no idea that he would write Chinese football history when he came to Beijing in 1994 at the age of 26. A forwarding agent by training from Duesseldorf, he had secured a scholarship to study Chinese and logistics. But he didn’t want to be completely without football in a foreign country. Even when he was still in Japan, where he had previously worked for two years at the freight forwarding company “Nippon Express,” he founded a hobby team with friends called “Fortuna 1993 Tokyo,” a nod to his home club. “So it was only natural for me to set up a team in Beijing too,” the 55-year-old says.
In the 1990s, China tried harder than ever to become a football nation, with Europe as a role model. At that time, the Chinese had just failed to qualify for the 1994 World Cup in the USA, losing somewhat shamefully in the preliminary round of qualifying for Asian countries. Despite all the money invested in beautiful jerseys and top foreign players, the grassroots work was severely lacking. At the time, there were only the first and second Chinese leagues, no official amateur leagues. The rent for sports fields was too high for amateur athletes, Gonnella recalls. Showers and floodlights were usually not even included in the pitch fees.
It was a gap that the pony-tailed idealist quickly filled. He founded Fortuna Beijing in the same year he arrived. Still living in a dormitory then, he found his teammates via notices on the bulletin board. F94, as it is abbreviated, is a multicultural bunch; Russians, Arabs, Nepalese, French, Japanese, English, Chinese, Palestinians and Germans play together. To create a framework and incentive, Gonnella created an “International Friendship Football League,” as he had done in Japan before. The opponents initially consisted mainly of teams of embassy staff and other expats, who had already played loosely against each other before, but now compete against each other in ten teams in back-and-forth matches. There were even plans for a Super Cup.
Robert Gonnella was studying for a degree in logistics and transportation at Peking University on the side. But football quickly became a full-time job for him. More and more Chinese people started playing, including rock musician Cui Jian and his team, Red Star. When things got relatively big in 1996, with an average of 200 spectators, the Chinese Football Association contacted Gonnella – initially, however, to inform him that his league was illegal.
However, the association also recognized the opportunities of an international team on Chinese soil – and officially allowed Gonnella to integrate his league into the Chinese Football Association. The “International Friendship Football Club” (IFFC), as it is now called, is also used to train football coaches who learn about international customs, such as sidetacking, which was previously frowned upon in China. Cultural mediation generally plays a crucial role in Gonnella’s venture.
“Certain mentalities clashed,” he recalls. “Some South Americans, for example, had a habit of standing in front of their opponent when they were angry and shouting in the other player’s face from 10 centimeters away. For Koreans and Japanese, but also for the Chinese, that was like a punch. Or whenever an Englishman shouted ‘fuck,’ they were kicked out at first because the referee interpreted it as a personal insult, when it was simply an expression like ‘shit’.”
At its peak in the 1990s, Gonnella’s league had 1,000 members from over 80 nations: three men’s leagues, a women’s league and a youth league. At the time, it was China’s largest amateur association in terms of membership. As league manager, Gonnella published his own IFFC newspaper and organized the match schedule, referees and pitches. Everything was still done “old school” by fax. Gonnella’s own team, the all-star team “Zebras,” was also allowed to play in the official promotion playoffs to the second Chinese league. Unfortunately, they were not allowed to move up themselves “because we were not a Chinese club.”
Like the football coach Klaus Schlappner, who was also active in China at the time, Gonnella became a kind of German sports ambassador – his proficiency in Chinese literally opened doors for him. When Franz Beckenbauer’s publishing house wanted to position his autobiography on the Chinese market, Gonnella organized television appearances and autograph sessions in 1997. However, he not only met footballers, but also artists and officials. “The 1990s were a golden age in China. Back then, many things were possible that are unthinkable today.”
When the 2008 Olympics in Beijing approached, regulations became tougher. “More high-tech, more cameras, more pressure. A lot of things became more difficult for foreigners, too.” In 2011, Gonnella returned home after 18 years in China to look after his mother. In the meantime, he married a Chinese woman from Tianjin. Their son will attend school in Germany, where there is a little less pressure.
Today, Robert Gonnella is once again devoting himself to his other great passion: music. Before moving to Asia, he played in the heavy metal band Assassin, which today is considered one of the pioneers of the extreme thrash metal genre. This is where he got his nickname, Raging Rob, which is also the name of his current band project.
He visits China regularly; his son, who is raised bilingually, has just visited the country for the first time. The league he founded still exists. It even holds its own “Gonnella Cup” in his honor. However, Gonnella believes the reason why football is still not a popular sport in China is partly due to the strict educational methods. “Chinese football has never really been accepted by society. Everyone wants Chinese football to progress, but nobody wants to offer up their children for it. They are expected to get a good education and are sent to countless tutoring lessons. Unfortunately, football is not one of the disciplines they learn there.” Fabian Peltsch
Heavy rain events are also increasing in China. Shanghai expected a heavy rainstorm on Tuesday. The port city has issued a warning as the storm, accompanied by heavy thunderstorms, is approaching from the south. There, in the coastal provinces of Fujian and Guangdong, heavy rainfall caused severe flooding last week. And yet, some people in Shanghai’s Lujiazui financial district dare to step outside to photograph the dark gray wispy clouds between the skyscrapers.
