De-risking and diversification – easier said than done. And Germany’s companies are also working hard on their “China+1” strategies. However, German foreign trade is likely to suffer a severe setback when it comes to the important diversification in the Asia-Pacific region. This is shown by the latest estimates from the business development organization Germany Trade & Invest (GTAI). The experts fear a decline of five to six percent.
The reasons for this are manifold – but are primarily to be found in China. After all, China is pushing into new markets due to weak domestic demand. Our first analysis reveals the sectors and countries in which German companies are already doing well and what policymakers need to do.
In the second piece, we look at a possible revolution. More specifically, it is about wheel hub motors. This technology actually dates back to the last century and caused a sensation at the 1900 World Exhibition in Paris. Now the time seems to have come for a comeback, writes Christian Domke Seidel. The German start-up DeepDrive may have achieved a technical breakthrough. Trails are currently underway with BMW and Continental.
If these are successful, German technology could truly revolutionize the EV market – and completely reshuffle the cards in the important Chinese market. So it does exist, after all, the German art of engineering that many had already declared extinct.
Your Michael Radunski
Feature
Asia-Pacific: Why diversification from China proves so difficult
The port of Tanjung Priok in Jakarta: Over half of Indonesia’s freight trade is handled here.
German foreign trade with the Asia-Pacific region will shrink this year. This is the conclusion reached by the federal economic development agency Germany Trade & Invest (GTAI). Based on the trade figures for the first five months, the experts expect a decline of five to six percent to around 480 billion euros in 2024.
It would mean a severe blow to German foreign trade. Because:
Asia-Pacific is Germany’s second most important trading partner after Europe.
Asian trade is falling more sharply than Germany’s total exports.
This is the second consecutive decline after 2023.
But Germany’s companies remain committed to their diversification strategy. This is right and important, given the growing geopolitical tensions between China and the United States. However, the “China+1” strategy, in which companies selectively diversify their supply chains and production locations, requires political backing. China and the USA show how this can be done: through their own trade agreements.
Weak demand depresses German exports
The decline in German trade with the Asia-Pacific region has many causes. “Exchange rate fluctuations and subdued demand provide explanations for the slump in German exports to the Asia-Pacific region in particular,” the latest GTAI study states.
Specifically, two main causes are: China’s weak economy and general localization trends in Asia. While German companies are increasingly manufacturing in the region for local markets, local suppliers are also entering the production chain in China. As a result, German and Chinese companies are looking for alternative sales markets in the region.
GTAI expert Mahlke: ‘China is the decisive factor’
China is Germany’s largest trading partner in the region by far. The People’s Republic accounts for around half of Germany’s Asian business. However, the Chinese economy has not been able to get back on track since the Covid pandemic.
Although China’s economy grew stronger than expected in the first quarter of 2024 at 5.3 percent year-on-year, domestic consumption remains sluggish. “China is the decisive factor,” GTAI trade expert Niklas Mahlke told Table.Briefings. “The fact that domestic consumption in China is weakening has a major impact on German exports.”
This has two main consequences:
German companies sell less in China.
Chinese companies push into foreign markets.
China buys fewer German products
The German slump in the Chinese market is particularly high in three important export sectors:
Chemicals -14.7 percent;
Road vehicles -18.5 percent;
Electronics -8.3 percent.
Another important area is the sale of German machines. And there is good news that could indicate the future direction: Business with German machinery is stable overall at around 44 billion euros – despite a decline of 3.8 percent in trade with China.
The reason: There are shifts in the target countries. While machinery exports to China are declining, purchases from other important trading partners such as Indonesia, Singapore and Australia are growing significantly.
Successful diversification with India, Indonesia and Vietnam
German companies are also gaining new markets in other sectors. “India, in particular, has developed strongly in bilateral trade,” explains GTAI expert Mahlke. But ASEAN countries such as Indonesia, Malaysia and Vietnam are also becoming increasingly important for German exports.
In an interview with Table.Briefings, Florian Feyerabend, Director of the Konrad Adenauer Foundation in Hanoi, also heavily favors Vietnam: “As part of a strategy of diversification and de-risking, Vietnam has become particularly interesting for German companies.” However, the political situation in Vietnam is now getting complicated – and therefore difficult for German companies. China is also very active here and has invited Vietnam’s new head of state, Tô Lâm, on a state visit to Beijing next week.
China’s companies push into foreign markets
Weak domestic consumption in China is not only depressing sales of German products. It is also increasingly forcing Chinese companies to enter foreign markets. And this is where China’s deepening economic integration with the ASEAN countries is particularly evident. ASEAN is now a more important trading partner for China than the EU or the USA.
Importantly, China deliberately pursues economic integration outside the World Trade Organisation (WTO). According to GTAI data, China has signed over 21 free trade agreements by the end of 2023, with another ten under negotiation. This way, China wants to make its trade more independent and more resistant to sanctions.
This is primarily due to geopolitical considerations, first and foremost, the growing trade conflict with the United States. The result: The United States is excluded from the world’s largest free trade zone, the Regional Comprehensive Economic Partnership Agreement (RCEP). Instead, the ASEAN states, such as Japan, South Korea, Australia, and New Zealand, are members. And China, of course. The United States is pursuing a similar strategy. Its answer to RCEP is called the Indo-Pacific Economic Framework (IPEF), which currently has 14 member states – and, unsurprisingly, not China.
Chinese competition – despite diversification
Like the weak Chinese domestic consumption, the advance of Chinese companies into Asia-Pacific markets also directly impacts German trade. “As China is also diversifying, we are now also seeing increasing competition from Chinese companies in the other countries of the Indo-Pacific,” explains Mahlke.
The German government and the European Union have an important role in this competition. As promising as diversification and risk minimization may sound, trade with China still lags far behind in absolute terms.
GTAI expert Mahlke recommends: “It is important to promote trade fairs, export initiatives and the granting of export credit guarantees. Bilateral trade agreements with the EU are also an important instrument.” China and the United States show how it can be done. Both Germany and the EU should urgently get more involved here. Australia and Indonesia are two large countries that have signaled a strong interest in trade agreements.
Pazifik
Wheel hub motor: How German technology could revolutionize EVs
It could look like this: Wheel hub motor in a Continental car.
Felix Poernbacher is already talking about a revolution. The reason: His German company DeepDrive has achieved a breakthrough in wheel hub technology. The company is currently carrying out trials with BMW. Continental also partnered with DeepDrive and is working on scaling up the technology. Poernbacher is confident: “We believe that the development of our dual-rotor motor will revolutionize the electrification of vehicles,” says the co-founder and Managing Director of DeepDrive.
And indeed: Wheel hub motors could be the decisive engineering achievement that allows German manufacturers to regain ground in the field of electric cars. However, Asian OEMs are also researching the technology.
Hyundai, BMW and Continental in pole position
But what is behind DeepDrive’s supposed breakthrough? The company has successfully made the drive much lighter and more compact. At the heart of this development leap is the double rotor concept (the stator drives an internal and an external rotor simultaneously). BMW has been funding the development since 2021. The laboratory tests have been completed, and practical tests are now underway.
However, DeepDrive is still an independent company. As euphoric as BMW may appear in press releases, the company does not exclusively own the technology. “Collaborating with BMW gave us a springboard really early on. It helped us navigate the complex corporate world and meet and exceed the rigorous standards of the automotive industry. Our goal now is to get it integrated into a production model,” Poernbacher explains in a press release.
Race for the Chinese market
One key market for this is China. German manufacturers are visibly losing ground here, especially in the booming EV sector. Wheel hub motors could help to rebalance the race for market shares. Provided that the companies adopt this technology early enough.
Speaking to Table.Briefing, a BMW company spokesperson stated that DeepDrive is collaborating with Continental on large-scale production. Chinese manufacturers are also said to be among the interested parties. Although they are also working on wheel hub motors, major breakthroughs – such as DeepDrive’s – are still a long way off.
Hyundai has a different China problem
Hyundai is also hoping that the technology will give it new momentum. The company has been researching the technology for years and presented the Uni Wheel in 2023. It is also a very compact and lightweight wheel hub motor. However, the Korean brand has a problem in China.
In 2017, it still manufactured around 1.6 million vehicles in the People’s Republic. After Korean brands were hit by restrictions, the number fell to 250,000 units in 2023. The company has now launched a new EV offensive in China and has formed a joint venture with BAIC. The wheel hub motor could play a key role here in the medium term.
German technological lead
However, the wheel hub motor also shows how German engineers can maintain a technological lead. Philipp Boeing has already spoken with Table.Briefing about the disparities between innovations and patents in this context. He is a Professor of Empirical Innovation Research specializing in China at Goethe University Frankfurt and ZEW Mannheim.
German car manufacturers still have an edge in mechanical engineering and the automotive industry. This is also reflected in a patent study by the law firm Gruenecker. The study found that the five largest German car brands in China had filed almost 2,000 EV patents in 2022. That is twice as many as in 2018.
Wheel hub motors: A not entirely new technology
In principle, the wheel hub drive is not a new concept. The “Lohner Porsche” was already on display at the Paris World Exhibition in 1900. Ludwig Lohner and Ferdinand Porsche had mounted an electric motor on each wheel. This also made the vehicle the first passenger car with all-wheel drive. To this day, the car enjoys legendary status in the automotive industry. However, after patent disputes and funding problems, the project was abandoned and the wheel hub motor also disappeared from cars.
And rightly so. This is because the wheel hub drive has a number of inherent problems that have so far prevented large-scale production:
Unsprung masses: Wheel hub motors are installed directly in the wheels, which means they are located in front of the car’s springs and dampers. This makes cars equipped with such motors simply uncomfortable to drive.
Load: Due to their special position, these motors are exposed to moisture, dirt, high temperatures and vibrations.
EV revolution thanks to the wheel hub motor
The wheel hub motor has been successful outside the automotive industry. Trams, various industrial vehicles, electric buses, electric bikes and certain agricultural machinery have successfully relied on this technology for decades. Consequently, car manufacturers have repeatedly tried to breathe new life into the wheel hub motor – for example, Honda (FCX Concept, 2005) or Volkswagen (eT!, 2011). The supplier Schaeffler was particularly committed to developing and showcasing test vehicles in collaboration with Opel and Ford.
The electric car boom has now given the wheel hub motor a kind of renaissance. The advantages could trigger a small revolution:
Flexibility: With four motors on the wheels, vehicles can be redesigned from the ground up. The classic engine compartment, drive shaft and gearbox become redundant, leaving space for batteries, storage space or electronics.
Efficiency: Because the motors are positioned on the wheels, they transmit power very directly. This minimizes energy loss and maximizes responsiveness.
Last but not least, DeepDrive’s design has a unique advantage: The motor can be built without the need for rare earths. This reduces dependence on China and is an essential step towards holistic de-risking.
Car Industry
De-Risking
E-cars
Technology
News
Hong Kong: Top Court upholds conviction of Jimmy Lai
Hong Kong’s top court on Monday unanimously dismissed the bid to overturn the convictions of media tycoon Jimmy Lai and six other pro-democracy campaigners for an unauthorized assembly in 2019. This shows how severely the National Security Law restricts freedom of expression in Hong Kong.
The 76-year-old Jimmy Lai, founder of the anti-government newspaper Apple Daily, and the other defendants had appealed against their convictions. They argued that the conviction was not proportionate to fundamental human rights protections. Irish human rights lawyer Caoilfhionn Gallagher is leading the international defense of the imprisoned Hong Kong publisher. In an interview with Table.Briefings, she called on the EU and Germany to hold China more accountable. Lai has been held in solitary confinement for more than three years since December 2020.
The legal basis is the controversial National Security Law. It allows the authorities to crack down on perceived threats to national security. Critics see this as a restriction of Hong Kong’s civil rights and autonomy, which were guaranteed to the former British crown colony for 50 years when it was returned to China in 1997. According to the Security Bureau, 301 people were arrested over acts or activities that endanger national security. Among them, 176 persons and 5 companies were charged. The law has significantly strengthened Beijing’s influence over Hong Kong and largely silenced the pro-democracy opposition.rtr
Jimmy Lai
Baltic States: China admits involvement in destruction of critical gas pipeline
Chinese authorities have admitted the destruction of a critical gas pipeline between Estonia and Finland following an internal investigation, as reported by the South China Morning Post on the basis of the Chinese investigation report. Last October, the Chinese container ship NewNew Polar Bear, flying the Hong Kong flag, severed the Balticonnector pipeline, Finland’s most important energy source, and two telecom cables with an anchor. The Chinese side explains that a storm had caused the incident.
However, the affected countries cannot present the internal report from China as official evidence in the investigations. Finland and Estonia are currently conducting joint criminal investigations. Estonian investigators have announced that it is not yet clear whether the incident was an accident or a deliberate act. The two EU states requested legal assistance for the investigation of the ship and the Chinese crew. However, there has been no response so far.
The destruction of critical infrastructure comes at a time of growing geopolitical tensions. The countries in the Baltic region are watching relations between Russia and China with growing suspicion. Following the as-yet-unexplained explosions on the Nord Stream 1 and Nord Stream 2 gas pipelines between Germany and Russia in September 2022, there is growing concern about the vulnerability of critical infrastructure. jam
Finnland
Logistics: This new drone is set to revolutionize the transport of goods
China’s largest unmanned cargo drone has successfully completed its first test flight, according to Chinese state media. The aircraft’s maiden flight lasted 20 minutes before it landed safely at an airport in Sichuan province.
The twin-engine drone from Chinese manufacturer Tengden has a wingspan of 16 meters. With a commercial load capacity of two tons and a range of up to 2,000 kilometers, it outperforms other models such as the HH-100 drone from Chinese manufacturer Aviation Industry Corporation of China, which was unveiled in June.
Tengden focuses on the development of low-flying drones for use in airspace below 1,000 meters. The “low-altitude economy” (低空经济), as the commercial use of drones is referred to in China, is an industry with enormous growth potential. In April, the Chinese government published the first work report on the development of the commercial drone industry.
The drone business is set to grow into a billion-dollar market by 2030. More than 2,000 companies have already registered in China in the past year. The drones are used to transport goods and for disaster management. Passenger drones have also already completed their first test flights. jam
Transport
Climate: How the central bank wants to support green investments
China’s central bank has extended its support for investments in climate-friendly projects. Through a special financing scheme, financial institutions are to support companies in projects to avoid emissions. The financing window gives banks up to 60 percent of the principal for qualified loans at a one-year lending rate of 1.75 percent. The loan program has been extended until 2027. This was announced by the State Council on Sunday.
In a sweeping statement of policy goals that was short on specific implementation plans, China also promised to develop tax and investment policies that would support what Beijing calls a “green transformation” of the world’s second-largest economy.
The plan included
the promotion of battery-powered vehicles,
energy and water-saving home appliances
and the use of more environmentally friendly building materials.
The overall target, according to the plan announced on Sunday, was for China to put its economy “fully on the green and low-carbon track” by 2035 with declining carbon emissions by that time. rtr
Klima & Umwelt
China Perspective
Why Chinese athletes deserve sympathy
Chinese athletes were not so popular at the 2024 Olympics, although they stood high on the medal tally, only after the team of USA. Following ARD and the New York Times‘ pre-games reports about an unrevealed doping case involving eleven Chinese swimmers competing in Paris, the invisible sticker Cheater has been hanging over the Chinese athletes throughout the games. Unfriendly comments came not only from the swimming pool, but also from foreign athletes of other sports and the audience.
They don’t deserve this. Chinese athletes, as a group, have a sad story to tell, just like the Chinese people. To put it short, they are basically sweatshop workers for sports, very few fortunate ones winning the lottery, or gold medals. In international arenas, they pay the price for their home country’s bad image, an inhuman medal-producing machine monopolized by the state as well as a generally not-so-clean global system for competitive sport.
Life is hard for Chinese athletes
These athletes all start their careers at a very young age, climbing all the way up from the grassroots to the national team. Those performing unsatisfactorily for a period of time will be sent back to the provincial teams, which can, in turn, also dismiss them. Apart from a few exceptions, such as equestrian, only kids with humble family backgrounds would pick this path, lured by the fame and prize.
It’s a full-time job. Training is extremely intensive and hard. They have to spend so much time in training that they don’t get sufficient proper education, which results in their limited knowledge about things outside the sports world. And surely, they also get their share of nationalistic education because they would be used as vanguards to fan up national pride.
Short spotlight and usual unhappy career-ending
Olympic gold medal winners can get prize money from different levels of government and private sponsors. Depending on the popularity of the sport, cash that would be showered on each of them ranges between euro equivalent of 50,000 and millions. But the amounts for silver and bronze winners are negligible. And there are a big number of unsung athletes getting nothing.
When they are over their prime, lucky ones will become coaches at the national level and provincial levels. Very few socially or commercially sophisticated ones became powerful bureaucrats, such as Deng Yaping, long-time ping-pong world No. 1 and winner of four Olympic golds, or successful entrepreneurs, such as gymnast Li Ning, winner of three Olympic golds.
Some tried to use their fame to become influencers, such as swimmer Sun Yang, an Olympic gold medal winner banned from competition for four years after refusing a doping test by smashing a sample vial in 2018. But few were really successful, Sun included.
The vast majority of them have to, with injuries from the hard training but no professional skills, start an entire new life from scratch.
China’s sport system improved, but is still harsh
The Chinese system for competitive sport, or medal machine, is expensive, opaque and corrupt. It is like a semi-military unit with many teenage soldiers, who are at the lowest level of the hierarchy. There were times when it was totally comparable to the system of GDR: Almost the entire Chinese national swimming team doped in the 1990s, and it was a tradition that table tennis and badminton players gave fake performances to let teammates with bigger chances of beating foreign rivals go to the next round.
Despite increased individual freedom thanks to the changes in the general social environment, the athletes are still pretty much under the system’s strict control.
China vs. USA – rivalry also in doping
This is not to say Chinese athletes are all innocent. Despite their manipulative environment, they still have some room to make choices about their own health and integrity, which, understandably, could mean a high personal price to pay. But at least in the case reported by the New York Times, the explanation of the World Anti-Doping Agency (WADA) was reasonable.
It is also inconceivable that the Chinese swimming team, after all the scandals in previous years, would try their luck again on such a large scale. WADA’s counter-accusation that the US team has been very lenient to its own suspicious players was a bit self-defeating, but it did remind people that the US team has never been very clean.
It is interesting to see that China, a totalitarian regime, uses sports to glorify itself, and the US, a megalomaniac superpower obsessed with dominating everything and talented in commercializing everything, sports included, collide head-on in arenas. Even the New York Times, a reputed news organization, was helping to fan up the bitter rivalry. But it is sad for sport and for the athletes, who, even if they want, can’t avoid being tainted by the dirty business behind sport.
WADA does need to improve its capacity and transparency, especially in sensitive cases, but that would require stronger commitment and financial support from the sports world, the International Olympic Committee, and the governing associations of related sports. They need to ask themselves how devoted they really would like to be in this regard.
Executive Moves
Aditi Rasquinha is the new CEO of DHL Global Forwarding Greater China. Rasquinha started her career at DHL in 2005 as a Business Analyst in the Global Customer Solutions team in Singapore. Since then, she gained experience at Kuehne + Nagel as Head of Ocean Freight Logistics in Thailand and the Netherlands. From 2021 she was Head of Ocean Freight Asia-Pacific at DB Schenker.
Ulrika Toftevik has been Chief Operating Officer at Zeekr Technology Europe since June. The Geely subsidiary specializes in the manufacture and sale of luxury electric vehicles. Toftevik previously worked for Volvo in Singapore. Her new location is Gothenburg in Sweden.
Is something changing in your organization? Let us know at heads@table.media!
Dessert
The 41st World Coin Awards were presented on Monday. This beautiful coin from China is a reminiscence of the Peking Opera and rightly won the prize for the best coin in circulation.
De-risking and diversification – easier said than done. And Germany’s companies are also working hard on their “China+1” strategies. However, German foreign trade is likely to suffer a severe setback when it comes to the important diversification in the Asia-Pacific region. This is shown by the latest estimates from the business development organization Germany Trade & Invest (GTAI). The experts fear a decline of five to six percent.
The reasons for this are manifold – but are primarily to be found in China. After all, China is pushing into new markets due to weak domestic demand. Our first analysis reveals the sectors and countries in which German companies are already doing well and what policymakers need to do.
In the second piece, we look at a possible revolution. More specifically, it is about wheel hub motors. This technology actually dates back to the last century and caused a sensation at the 1900 World Exhibition in Paris. Now the time seems to have come for a comeback, writes Christian Domke Seidel. The German start-up DeepDrive may have achieved a technical breakthrough. Trails are currently underway with BMW and Continental.
If these are successful, German technology could truly revolutionize the EV market – and completely reshuffle the cards in the important Chinese market. So it does exist, after all, the German art of engineering that many had already declared extinct.
Your Michael Radunski
Feature
Asia-Pacific: Why diversification from China proves so difficult
The port of Tanjung Priok in Jakarta: Over half of Indonesia’s freight trade is handled here.
German foreign trade with the Asia-Pacific region will shrink this year. This is the conclusion reached by the federal economic development agency Germany Trade & Invest (GTAI). Based on the trade figures for the first five months, the experts expect a decline of five to six percent to around 480 billion euros in 2024.
It would mean a severe blow to German foreign trade. Because:
Asia-Pacific is Germany’s second most important trading partner after Europe.
Asian trade is falling more sharply than Germany’s total exports.
This is the second consecutive decline after 2023.
But Germany’s companies remain committed to their diversification strategy. This is right and important, given the growing geopolitical tensions between China and the United States. However, the “China+1” strategy, in which companies selectively diversify their supply chains and production locations, requires political backing. China and the USA show how this can be done: through their own trade agreements.
Weak demand depresses German exports
The decline in German trade with the Asia-Pacific region has many causes. “Exchange rate fluctuations and subdued demand provide explanations for the slump in German exports to the Asia-Pacific region in particular,” the latest GTAI study states.
Specifically, two main causes are: China’s weak economy and general localization trends in Asia. While German companies are increasingly manufacturing in the region for local markets, local suppliers are also entering the production chain in China. As a result, German and Chinese companies are looking for alternative sales markets in the region.
GTAI expert Mahlke: ‘China is the decisive factor’
China is Germany’s largest trading partner in the region by far. The People’s Republic accounts for around half of Germany’s Asian business. However, the Chinese economy has not been able to get back on track since the Covid pandemic.
Although China’s economy grew stronger than expected in the first quarter of 2024 at 5.3 percent year-on-year, domestic consumption remains sluggish. “China is the decisive factor,” GTAI trade expert Niklas Mahlke told Table.Briefings. “The fact that domestic consumption in China is weakening has a major impact on German exports.”
This has two main consequences:
German companies sell less in China.
Chinese companies push into foreign markets.
China buys fewer German products
The German slump in the Chinese market is particularly high in three important export sectors:
Chemicals -14.7 percent;
Road vehicles -18.5 percent;
Electronics -8.3 percent.
Another important area is the sale of German machines. And there is good news that could indicate the future direction: Business with German machinery is stable overall at around 44 billion euros – despite a decline of 3.8 percent in trade with China.
The reason: There are shifts in the target countries. While machinery exports to China are declining, purchases from other important trading partners such as Indonesia, Singapore and Australia are growing significantly.
Successful diversification with India, Indonesia and Vietnam
German companies are also gaining new markets in other sectors. “India, in particular, has developed strongly in bilateral trade,” explains GTAI expert Mahlke. But ASEAN countries such as Indonesia, Malaysia and Vietnam are also becoming increasingly important for German exports.
In an interview with Table.Briefings, Florian Feyerabend, Director of the Konrad Adenauer Foundation in Hanoi, also heavily favors Vietnam: “As part of a strategy of diversification and de-risking, Vietnam has become particularly interesting for German companies.” However, the political situation in Vietnam is now getting complicated – and therefore difficult for German companies. China is also very active here and has invited Vietnam’s new head of state, Tô Lâm, on a state visit to Beijing next week.
China’s companies push into foreign markets
Weak domestic consumption in China is not only depressing sales of German products. It is also increasingly forcing Chinese companies to enter foreign markets. And this is where China’s deepening economic integration with the ASEAN countries is particularly evident. ASEAN is now a more important trading partner for China than the EU or the USA.
Importantly, China deliberately pursues economic integration outside the World Trade Organisation (WTO). According to GTAI data, China has signed over 21 free trade agreements by the end of 2023, with another ten under negotiation. This way, China wants to make its trade more independent and more resistant to sanctions.
This is primarily due to geopolitical considerations, first and foremost, the growing trade conflict with the United States. The result: The United States is excluded from the world’s largest free trade zone, the Regional Comprehensive Economic Partnership Agreement (RCEP). Instead, the ASEAN states, such as Japan, South Korea, Australia, and New Zealand, are members. And China, of course. The United States is pursuing a similar strategy. Its answer to RCEP is called the Indo-Pacific Economic Framework (IPEF), which currently has 14 member states – and, unsurprisingly, not China.
Chinese competition – despite diversification
Like the weak Chinese domestic consumption, the advance of Chinese companies into Asia-Pacific markets also directly impacts German trade. “As China is also diversifying, we are now also seeing increasing competition from Chinese companies in the other countries of the Indo-Pacific,” explains Mahlke.
The German government and the European Union have an important role in this competition. As promising as diversification and risk minimization may sound, trade with China still lags far behind in absolute terms.
GTAI expert Mahlke recommends: “It is important to promote trade fairs, export initiatives and the granting of export credit guarantees. Bilateral trade agreements with the EU are also an important instrument.” China and the United States show how it can be done. Both Germany and the EU should urgently get more involved here. Australia and Indonesia are two large countries that have signaled a strong interest in trade agreements.
Pazifik
Wheel hub motor: How German technology could revolutionize EVs
It could look like this: Wheel hub motor in a Continental car.
Felix Poernbacher is already talking about a revolution. The reason: His German company DeepDrive has achieved a breakthrough in wheel hub technology. The company is currently carrying out trials with BMW. Continental also partnered with DeepDrive and is working on scaling up the technology. Poernbacher is confident: “We believe that the development of our dual-rotor motor will revolutionize the electrification of vehicles,” says the co-founder and Managing Director of DeepDrive.
And indeed: Wheel hub motors could be the decisive engineering achievement that allows German manufacturers to regain ground in the field of electric cars. However, Asian OEMs are also researching the technology.
Hyundai, BMW and Continental in pole position
But what is behind DeepDrive’s supposed breakthrough? The company has successfully made the drive much lighter and more compact. At the heart of this development leap is the double rotor concept (the stator drives an internal and an external rotor simultaneously). BMW has been funding the development since 2021. The laboratory tests have been completed, and practical tests are now underway.
However, DeepDrive is still an independent company. As euphoric as BMW may appear in press releases, the company does not exclusively own the technology. “Collaborating with BMW gave us a springboard really early on. It helped us navigate the complex corporate world and meet and exceed the rigorous standards of the automotive industry. Our goal now is to get it integrated into a production model,” Poernbacher explains in a press release.
Race for the Chinese market
One key market for this is China. German manufacturers are visibly losing ground here, especially in the booming EV sector. Wheel hub motors could help to rebalance the race for market shares. Provided that the companies adopt this technology early enough.
Speaking to Table.Briefing, a BMW company spokesperson stated that DeepDrive is collaborating with Continental on large-scale production. Chinese manufacturers are also said to be among the interested parties. Although they are also working on wheel hub motors, major breakthroughs – such as DeepDrive’s – are still a long way off.
Hyundai has a different China problem
Hyundai is also hoping that the technology will give it new momentum. The company has been researching the technology for years and presented the Uni Wheel in 2023. It is also a very compact and lightweight wheel hub motor. However, the Korean brand has a problem in China.
In 2017, it still manufactured around 1.6 million vehicles in the People’s Republic. After Korean brands were hit by restrictions, the number fell to 250,000 units in 2023. The company has now launched a new EV offensive in China and has formed a joint venture with BAIC. The wheel hub motor could play a key role here in the medium term.
German technological lead
However, the wheel hub motor also shows how German engineers can maintain a technological lead. Philipp Boeing has already spoken with Table.Briefing about the disparities between innovations and patents in this context. He is a Professor of Empirical Innovation Research specializing in China at Goethe University Frankfurt and ZEW Mannheim.
German car manufacturers still have an edge in mechanical engineering and the automotive industry. This is also reflected in a patent study by the law firm Gruenecker. The study found that the five largest German car brands in China had filed almost 2,000 EV patents in 2022. That is twice as many as in 2018.
Wheel hub motors: A not entirely new technology
In principle, the wheel hub drive is not a new concept. The “Lohner Porsche” was already on display at the Paris World Exhibition in 1900. Ludwig Lohner and Ferdinand Porsche had mounted an electric motor on each wheel. This also made the vehicle the first passenger car with all-wheel drive. To this day, the car enjoys legendary status in the automotive industry. However, after patent disputes and funding problems, the project was abandoned and the wheel hub motor also disappeared from cars.
And rightly so. This is because the wheel hub drive has a number of inherent problems that have so far prevented large-scale production:
Unsprung masses: Wheel hub motors are installed directly in the wheels, which means they are located in front of the car’s springs and dampers. This makes cars equipped with such motors simply uncomfortable to drive.
Load: Due to their special position, these motors are exposed to moisture, dirt, high temperatures and vibrations.
EV revolution thanks to the wheel hub motor
The wheel hub motor has been successful outside the automotive industry. Trams, various industrial vehicles, electric buses, electric bikes and certain agricultural machinery have successfully relied on this technology for decades. Consequently, car manufacturers have repeatedly tried to breathe new life into the wheel hub motor – for example, Honda (FCX Concept, 2005) or Volkswagen (eT!, 2011). The supplier Schaeffler was particularly committed to developing and showcasing test vehicles in collaboration with Opel and Ford.
The electric car boom has now given the wheel hub motor a kind of renaissance. The advantages could trigger a small revolution:
Flexibility: With four motors on the wheels, vehicles can be redesigned from the ground up. The classic engine compartment, drive shaft and gearbox become redundant, leaving space for batteries, storage space or electronics.
Efficiency: Because the motors are positioned on the wheels, they transmit power very directly. This minimizes energy loss and maximizes responsiveness.
Last but not least, DeepDrive’s design has a unique advantage: The motor can be built without the need for rare earths. This reduces dependence on China and is an essential step towards holistic de-risking.
Car Industry
De-Risking
E-cars
Technology
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Hong Kong: Top Court upholds conviction of Jimmy Lai
Hong Kong’s top court on Monday unanimously dismissed the bid to overturn the convictions of media tycoon Jimmy Lai and six other pro-democracy campaigners for an unauthorized assembly in 2019. This shows how severely the National Security Law restricts freedom of expression in Hong Kong.
The 76-year-old Jimmy Lai, founder of the anti-government newspaper Apple Daily, and the other defendants had appealed against their convictions. They argued that the conviction was not proportionate to fundamental human rights protections. Irish human rights lawyer Caoilfhionn Gallagher is leading the international defense of the imprisoned Hong Kong publisher. In an interview with Table.Briefings, she called on the EU and Germany to hold China more accountable. Lai has been held in solitary confinement for more than three years since December 2020.
The legal basis is the controversial National Security Law. It allows the authorities to crack down on perceived threats to national security. Critics see this as a restriction of Hong Kong’s civil rights and autonomy, which were guaranteed to the former British crown colony for 50 years when it was returned to China in 1997. According to the Security Bureau, 301 people were arrested over acts or activities that endanger national security. Among them, 176 persons and 5 companies were charged. The law has significantly strengthened Beijing’s influence over Hong Kong and largely silenced the pro-democracy opposition.rtr
Jimmy Lai
Baltic States: China admits involvement in destruction of critical gas pipeline
Chinese authorities have admitted the destruction of a critical gas pipeline between Estonia and Finland following an internal investigation, as reported by the South China Morning Post on the basis of the Chinese investigation report. Last October, the Chinese container ship NewNew Polar Bear, flying the Hong Kong flag, severed the Balticonnector pipeline, Finland’s most important energy source, and two telecom cables with an anchor. The Chinese side explains that a storm had caused the incident.
However, the affected countries cannot present the internal report from China as official evidence in the investigations. Finland and Estonia are currently conducting joint criminal investigations. Estonian investigators have announced that it is not yet clear whether the incident was an accident or a deliberate act. The two EU states requested legal assistance for the investigation of the ship and the Chinese crew. However, there has been no response so far.
The destruction of critical infrastructure comes at a time of growing geopolitical tensions. The countries in the Baltic region are watching relations between Russia and China with growing suspicion. Following the as-yet-unexplained explosions on the Nord Stream 1 and Nord Stream 2 gas pipelines between Germany and Russia in September 2022, there is growing concern about the vulnerability of critical infrastructure. jam
Finnland
Logistics: This new drone is set to revolutionize the transport of goods
China’s largest unmanned cargo drone has successfully completed its first test flight, according to Chinese state media. The aircraft’s maiden flight lasted 20 minutes before it landed safely at an airport in Sichuan province.
The twin-engine drone from Chinese manufacturer Tengden has a wingspan of 16 meters. With a commercial load capacity of two tons and a range of up to 2,000 kilometers, it outperforms other models such as the HH-100 drone from Chinese manufacturer Aviation Industry Corporation of China, which was unveiled in June.
Tengden focuses on the development of low-flying drones for use in airspace below 1,000 meters. The “low-altitude economy” (低空经济), as the commercial use of drones is referred to in China, is an industry with enormous growth potential. In April, the Chinese government published the first work report on the development of the commercial drone industry.
The drone business is set to grow into a billion-dollar market by 2030. More than 2,000 companies have already registered in China in the past year. The drones are used to transport goods and for disaster management. Passenger drones have also already completed their first test flights. jam
Transport
Climate: How the central bank wants to support green investments
China’s central bank has extended its support for investments in climate-friendly projects. Through a special financing scheme, financial institutions are to support companies in projects to avoid emissions. The financing window gives banks up to 60 percent of the principal for qualified loans at a one-year lending rate of 1.75 percent. The loan program has been extended until 2027. This was announced by the State Council on Sunday.
In a sweeping statement of policy goals that was short on specific implementation plans, China also promised to develop tax and investment policies that would support what Beijing calls a “green transformation” of the world’s second-largest economy.
The plan included
the promotion of battery-powered vehicles,
energy and water-saving home appliances
and the use of more environmentally friendly building materials.
The overall target, according to the plan announced on Sunday, was for China to put its economy “fully on the green and low-carbon track” by 2035 with declining carbon emissions by that time. rtr
Klima & Umwelt
China Perspective
Why Chinese athletes deserve sympathy
Chinese athletes were not so popular at the 2024 Olympics, although they stood high on the medal tally, only after the team of USA. Following ARD and the New York Times‘ pre-games reports about an unrevealed doping case involving eleven Chinese swimmers competing in Paris, the invisible sticker Cheater has been hanging over the Chinese athletes throughout the games. Unfriendly comments came not only from the swimming pool, but also from foreign athletes of other sports and the audience.
They don’t deserve this. Chinese athletes, as a group, have a sad story to tell, just like the Chinese people. To put it short, they are basically sweatshop workers for sports, very few fortunate ones winning the lottery, or gold medals. In international arenas, they pay the price for their home country’s bad image, an inhuman medal-producing machine monopolized by the state as well as a generally not-so-clean global system for competitive sport.
Life is hard for Chinese athletes
These athletes all start their careers at a very young age, climbing all the way up from the grassroots to the national team. Those performing unsatisfactorily for a period of time will be sent back to the provincial teams, which can, in turn, also dismiss them. Apart from a few exceptions, such as equestrian, only kids with humble family backgrounds would pick this path, lured by the fame and prize.
It’s a full-time job. Training is extremely intensive and hard. They have to spend so much time in training that they don’t get sufficient proper education, which results in their limited knowledge about things outside the sports world. And surely, they also get their share of nationalistic education because they would be used as vanguards to fan up national pride.
Short spotlight and usual unhappy career-ending
Olympic gold medal winners can get prize money from different levels of government and private sponsors. Depending on the popularity of the sport, cash that would be showered on each of them ranges between euro equivalent of 50,000 and millions. But the amounts for silver and bronze winners are negligible. And there are a big number of unsung athletes getting nothing.
When they are over their prime, lucky ones will become coaches at the national level and provincial levels. Very few socially or commercially sophisticated ones became powerful bureaucrats, such as Deng Yaping, long-time ping-pong world No. 1 and winner of four Olympic golds, or successful entrepreneurs, such as gymnast Li Ning, winner of three Olympic golds.
Some tried to use their fame to become influencers, such as swimmer Sun Yang, an Olympic gold medal winner banned from competition for four years after refusing a doping test by smashing a sample vial in 2018. But few were really successful, Sun included.
The vast majority of them have to, with injuries from the hard training but no professional skills, start an entire new life from scratch.
China’s sport system improved, but is still harsh
The Chinese system for competitive sport, or medal machine, is expensive, opaque and corrupt. It is like a semi-military unit with many teenage soldiers, who are at the lowest level of the hierarchy. There were times when it was totally comparable to the system of GDR: Almost the entire Chinese national swimming team doped in the 1990s, and it was a tradition that table tennis and badminton players gave fake performances to let teammates with bigger chances of beating foreign rivals go to the next round.
Despite increased individual freedom thanks to the changes in the general social environment, the athletes are still pretty much under the system’s strict control.
China vs. USA – rivalry also in doping
This is not to say Chinese athletes are all innocent. Despite their manipulative environment, they still have some room to make choices about their own health and integrity, which, understandably, could mean a high personal price to pay. But at least in the case reported by the New York Times, the explanation of the World Anti-Doping Agency (WADA) was reasonable.
It is also inconceivable that the Chinese swimming team, after all the scandals in previous years, would try their luck again on such a large scale. WADA’s counter-accusation that the US team has been very lenient to its own suspicious players was a bit self-defeating, but it did remind people that the US team has never been very clean.
It is interesting to see that China, a totalitarian regime, uses sports to glorify itself, and the US, a megalomaniac superpower obsessed with dominating everything and talented in commercializing everything, sports included, collide head-on in arenas. Even the New York Times, a reputed news organization, was helping to fan up the bitter rivalry. But it is sad for sport and for the athletes, who, even if they want, can’t avoid being tainted by the dirty business behind sport.
WADA does need to improve its capacity and transparency, especially in sensitive cases, but that would require stronger commitment and financial support from the sports world, the International Olympic Committee, and the governing associations of related sports. They need to ask themselves how devoted they really would like to be in this regard.
Executive Moves
Aditi Rasquinha is the new CEO of DHL Global Forwarding Greater China. Rasquinha started her career at DHL in 2005 as a Business Analyst in the Global Customer Solutions team in Singapore. Since then, she gained experience at Kuehne + Nagel as Head of Ocean Freight Logistics in Thailand and the Netherlands. From 2021 she was Head of Ocean Freight Asia-Pacific at DB Schenker.
Ulrika Toftevik has been Chief Operating Officer at Zeekr Technology Europe since June. The Geely subsidiary specializes in the manufacture and sale of luxury electric vehicles. Toftevik previously worked for Volvo in Singapore. Her new location is Gothenburg in Sweden.
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Dessert
The 41st World Coin Awards were presented on Monday. This beautiful coin from China is a reminiscence of the Peking Opera and rightly won the prize for the best coin in circulation.
