China.Table wishes you a happy and prosperous new year. Over the next four weeks, we are getting ready for the Chinese New Year on February 1st. We’ll be ready for the Tigers.
This Monday, our CEO Talk with Frank Sieren is all about the hotel industry. Ilja Poepper is an expert in the hotel business in China. He was the only European top manager at the Chinese conglomerate Dalian Wanda. Now, he is the Regional Vice President for marketing in Asia at Kempinski. He tells us about rich Chinese who easily spend several thousand euros for an overnight stay – only to order food from delivery services. Clever management must also be ready for this. Anyone involved in Chinese marketing will also take notice of something else: Poepper is convinced that approaching influencers is key for success in China.
He also tells of his interactions with Wang Jianlin, the founder of the Wanda Group. He has a military leadership style. But a high level of discipline makes it possible to complete complex projects on schedule. “There were no excuses or developments like at the new Berlin airport,” says Poepper.
China just likes to stay on schedule. However, anyone who is clinging to this fact will be left confused by present events when looking at climate policy. While China only brought lukewarm plans to the international climate conference, it could exceed them by far, as current assessments show. At the same time, economic planners are sending contradictory signals in favor of coal. Christiane Kühl leads you through the maze of Chinese climate plans in her feature.
On January 1st, the free trade mechanism RCEP was launched – if you are interested in the details, China.Table has got you covered. And if you did not open China.Table during the holidays, we would like to draw your attention to our interview with sinologist Klaus Muehlhahn. In his forecast for 2022, he puts the signals of Chinese domestic and foreign policy into perspective. His message doesn’t bode well for foreign trade: China is now systematically beginning to use the supply chain to exert pressure.
Have a pleasant start to this special week!
Ilja Poepper (50) is Vice President Sales & Marketing of Kempinski Hotels in Asia. Poepper is already the second generation to live in Beijing. His father was the head of Alcatel SEL in China and co-founded the German business community in Beijing in the mid-1980s, which later became the AHK.
His son Ilya went to the German School in Beijing and later attended the Steigenberger Academy in Bad Reichenhall, one of the most renowned schools for hotel management. Nevertheless, things were not just handed to him for free – on the contrary – he has worked his way up through the Chinese hotel business: Hsi tenures included Intercontinental, Holiday Inn, Crowne Plaza, and Howard Johnson. In 2012, he was appointed Vice President at the Chinese real estate group Wanda.
At Wanda, he was involved in the development of the first Chinese luxury hotel group and the opening of 76 hotels in six years. Here, Poepper was responsible for a turnover of $1.1 billion and greatly exceeded profit expectations. After this stressful success, he was finally able to fulfill his dream and just do nothing for a whole year while sailing in Southeast Asia, as well as Lake Constance. In 2019, he then joined Kempinski, the oldest European luxury hotel group based in Geneva.
Click here to view the full interview in German.
What does a German luxury hotel group have to do to be successful in the face of tough competition in Asia?
You have to be fast and agile. No other market is as dynamic and changes as quickly as the Asian market. Many hotel groups focus on volume and become bigger and bigger by buying up other hotel groups. Even the employees of these groups sometimes lose track of their brands. The Marriott Group, for example, has ten different luxury brands. And in this predatory market, we at Kempinski Hotels strive to be different: small but mighty.
But is that enough to succeed in booming Asia?
That alone is not enough, but we also have a fascinating history. 125 years ago, our founder Berthold Kempinski already began to build up our company through the wine trade and a restaurant in Berlin. And today, excellent restaurants are still at the heart of our hotels. In Beijing’s Kempinski Hotel alone, we operate half a dozen successful restaurants, including the Paulaner, which has been a focal point for fine German cuisine in the city for decades.
Don’t other hotels have restaurants as well?
That alone is certainly not enough. Our hotels are icons with individual character, be it the Hotel Adlon Kempinski Berlin at the Brandenburg Gate, the Hotel Vier Jahreszeiten Kempinski in Munich’s Maximilianstrasse, or even the Beijing Kempinski in the Lufthansa Center, which after 30 years, is indispensable in modern Beijing. Nanjing, on the other hand, is home to the tallest Kempinski, with a lobby on the 53rd floor. Because we have less than 80 hotels worldwide and not hundreds or thousands like some other hotel groups, we can afford to emphasize the individuality of each hotel. The customers take notice of that.
How many hotels do you manage?
In Asia, I am in charge of 30 hotels, a number that still allows me to deal extensively with each one and to visit each one personally at least twice a year – if normal travel is possible.
And with the Beijing Hotel Nuo Forbidden City, you just acquired a rather special hotel.
The hotel is unique in Beijing. It is located near the Forbidden City and was built in 1910 in the French style with stucco and very high ceilings. Chiang Kai-shek, the opponent of Mao Zedong, stayed there just like Mao. Or China’s last emperor or the former US president Jimmy Carter. The hotel has a stunning ballroom and bar with still original wooden flooring, on which many generations have danced. Plus: incredible chandeliers. During renovations, we found the historical menus and will recreate them to be just as they were in the old days.
Will that even work with young Chinese?
If you have the right KOLs, the key opinion leaders, you can do it. China also works differently than the West in this regard. Here, social media is everything. Influencers are the be-all and end-all of success. In some luxury hotels, five influencers rent a room and then take turns playing rich hotel guests. And such a historic building naturally brings lots of good social media pictures.
This hotel will not be called Kempinski, but Nuo. Why a new brand?
We decided with our Chinese partner, Beijing Tourism Group, to build a Chinese luxury group that is younger and more experimental. It is a great challenge for us to combine this traditional Chinese hotel with such a young brand.
You also just opened another Nuo that works quite differently.
Yes, a themed hotel with Big Panda or Harry Potter rooms in the Universal Studios amusement park, one of the largest in the world here in Beijing. Here, the room prices are between €400 and €500 per night, the suite prices are around €1,000. Right from the start, we were overbooked here and the park sold $45 million worth of tickets in the first twelve hours of opening. That’s insane. And this is how our Chinese hotel brand is growing with a lot of German know-how. When we opened our first Kempinski hotel in China in 1992, our guests had to fight to get a room because there were hardly any good hotels. Now, we have to prove ourselves amongst tough competition.
This requires skilled staff.
This is one of our biggest challenges. New hotels are being built faster than the hotel schools can train staff. So the prices go up and the fluctuation is enormous.
How are Chinese customers different from Western customers?
Young Chinese customers are less loyal than the somewhat more mature customers in the West. That’s why we always have to come up with something new in China, whereas in the West they often prefer the tried and true and traditional. And you have to be prepared for things to change quickly, especially in these Corona times. On any given day, we have over 70 percent occupancy in China. In Beijing, as much as 80 percent. And, then another Corona situation comes along and the next day, occupancy suddenly plummets to 30 percent, even though there are very few Corona cases in China. The hotel business has become even more fast-paced because of Corona. Whereas bookings used to be made ten days in advance, now it’s zero to three days. We have conferences with 500 rooms for three nights and a large banquet, they get booked between one and seven days in advance. If you don’t manage this flexibly and intelligently, you’ve lost the customer.
What annoys you about Chinese customers?
Annoying is the wrong way to put it, but the guests take different liberties than in the West. For example, they order their food from outside to the hotel. Then they walk through our beautiful 5-star hotel in bathrobe and slippers to pick up their noodles at the entrance. Yet they pay €3,400 a night. That’s where we need to rethink. We have to make it possible that they can also order the noodles via the hotel using a WeChat QR code and have them delivered to the room within five minutes, guaranteed. This works, even though the guest only saves the equivalent of three euros.
But if you introduce this, you will lose an important source of revenue.
Food is important and even more so in China. At the same time, food is also a complex source of income with high upfront costs. You have to buy ingredients, you need waiters. And then guests like to bring their own wine or liquor with the meal.
People like you, who know both cultures, are in particular in demand. You are already the second generation to live in China.
Yes. Chinese often say that Chinese, who have been living in the West for a long time, are like bananas: yellow on the outside and white on the inside. People like me are said to be like eggs, white on the outside and yellow on the inside. I’ll take that as a compliment.
Was there never an option for you to live permanently in Germany again?
Actually, no. As long as I’m working, I like to be where things are happening, and that’s here in China. And I think that will still be the case in 10 or 20 years. This is where the growth is, where the action is. This is where you have to be fast. And if you’re fast, you stay young. I remember when it took 24 hours to go to Shanghai by night train, today it’s just under 5 hours. And soon it will be only 90 minutes.
And the downside?
Some cities have lost their soul and all look the same. And the elbow society is getting stronger. In the past, people didn’t fight each other, but rather with each other. They absorbed the new things from the West, in the 80s it was cigarettes, Modern Talking, refrigerators, or Richard Clayderman. And anyone who knew a foreigner personally was very proud. Then came the trips to the West.
Now everything is at a standstill because of Covid.
Yes. I haven’t seen my mother and brothers, who now live in Berlin, for years. I used to go there at least twice a year. That’s what’s missing in Beijing: you can already see the consequences of closed borders in everyday life among the Chinese. They are no longer as international as they used to be. Around 150 million people were still abroad in 2019. This year it would probably have been 180 million.
Are they missing from the Adlon in Berlin?
Yes, and not only there. In Moscow, in St. Petersburg, in Africa, and in St. Moritz. In return, the Chinese now travel more within the country. In Beijing, for example, it’s 40 minutes to the Great Wall to Yanqi Lake, where we run a Kempinski hotel that looks like the rising sun, and on weekends, room rates here are easily between €300 and €400. So there are a lot of destinations that are now doing better than in 2019. If you have a hotel on the tropical island of Hainan, you have better occupancy than ever. Business is booming there.
But the industry is also suffering from overcapacity.
Yes, but less in the luxury sector. There are still far fewer top hotels per capita than in the US. In Shanghai, for example, our hotel has 700 rooms, an occupancy rate of 80 percent, with an average rate of over $200. So it’s worth opening more hotels.
Does this apply to all regions?
No. I would be careful with the Sanya region. People also love Thailand, which is not much farther from Beijing. And when the borders reopen, they will go there again, to another exciting culture.
How is the hotel industry changing?
I don’t want to scare my employees, but digitalization means that one person can sell as much today as ten sales managers used to. And what will be in ten years, we don’t know today anyway. We simply can’t imagine it. So it’s important to remain open to change.
But you have also experienced faster times, where you opened a new hotel every month.
Yes, when I worked at the Wanda Group. That was probably the fastest-growing hotel group in history. 76 hotels in six years and each had an average of around 300 rooms. I had months where I opened three hotels at the same time. That was an incredibly exhausting time, but I wouldn’t want to miss it because I learned an incredible amount. And I was allowed to work closely with Wang Jianlin, founder of the group and one of the richest Chinese. It was a very rewarding time, and I’m very proud of it. But you don’t do that forever.
He certainly wasn’t easy as a boss.
What took some getting used to was the military way he ran the company. If you were five minutes late for a meeting with him, you had to expect a cut of your bonus. But such growth is only possible with this iron discipline. If a new house was to be opened on October 1, it indeed happened on that date. There were no excuses or developments like at the new Berlin airport. If you don’t build up pressure on projects like this, you can’t keep up the pace. And to make it clear what a delay costs and that it is impossible to let the future guest down, Wang had banquets sold for this period months in advance.
Another example?
During my time at Wanda, I learned from a headhunter that my position was posted. I was shocked because I was loyal and had received a great evaluation. They told me then that they were also very happy with me. But you know, you should never feel comfortable at Wanda. You should always be a little scared. Because if you think you’re safe, you don’t do your job well. Then you become lazy. So it’s no wonder that after six years I first needed some time off.
Is that the same at Kempinski?
No. At Kempinski Hotels, they know that progress does not only come from pressure, but also from calmly thinking about where the journey should go. And that a reasonable work-life balance is also good for the quality of the work.
In 2019, the Steigenberger Group was sold to the Chinese. Can this work out?
If they see it as the icing on the cake of their hotel group with around 500 hotels, using customer data and leaving management alone, yes. But to make it a Chinese company would be wrong.
If you look five years into the future now, what are your biggest challenges? What do you need to work on?
I think we will have to live with the virus for the next ten years at least. The business with business travelers, but also with events and conferences will not come back like it used to. We have to adapt to a more individual business, offer more for families who stay over the weekend. To do that, we have to adapt the cuisine, because family dinners are different from business dinners. There is no need to have thousands of calories on the table anymore.
And, once you no longer have to work, where will you live? In a Chinese luxury resort?
No. I will live in the greatest luxury there is: in nature. I would then live by Lake Constance, enjoy the good air, the peace and quiet, and the healthy Lake Constance cuisine. I miss that already today: the great view of the Swiss mountains, walks in the vineyards and then in the late afternoon a “Viertele schlotzen”, as they say there. But until then, I want to ride the wave of fascinating Chinese growth for a while.
China is also struggling to find the most efficient regulations for the shift to climate neutrality. The transformation of the energy sector and heavy industry are the most difficult challenges. Currently, it looks as if one part of the Chinese leadership is stepping on the gas while the other one is pulling the brake. Over the New Year, the government’s Development Research Center published a report suggesting that the CO2 turnaround could come two years earlier than previously expected. Greenhouse gas emissions could peak as early as 2028, not 2030, according to government researchers. The reasons are lower growth and faster take-up of climate protection measures.
In December, however, the Central Economic Work Conference of the Communist leadership had sent quite different signals: Is the emphasis on coal as the “basis” of the power supply until 2030 to be understood as an imminent boom in fossil fuels? Is China also saying bidding farewell to climate targets with the end of power-saving caps? Or aren’t the emissions quotas that will be introduced the better measure anyway? Observers were initially both concerned and optimistic.
Nis Gruenberg, a climate expert at the Mercator Institute for China Studies (Merics), sees the latest developments as a continuation of previous climate policy. According to Gruenberg, the formulated rates do not contradict China’s so-called 30/60 targets: peak emissions before 2030, climate neutrality by 2060 at the latest. “One problem in the analysis is that many things are currently happening on different tracks at the same time,” says Gruenberg. At the Central Economic Work Conference, the focus had been on macroeconomic issues and the role of power consumption and greenhouse gasses in industry. “This tends to only broadly outline issues such as climate or the environment.”
At the same time, other offices of the party and the government are dealing with climate protection. For example, both the central government’s Five-Year plans as well as the individual plans for specific industries or ministries include climate targets. The most concrete, however, are the so-called 1+N plans according to Gruenberg: “They form the top-level framework for decarbonization. These plans show how China’s economy is to be trimmed toward the 30/60 targets. They deal with sectors, industries, and technologies.” The first N action plan was issued in October and addresses the path to 2030 (China.Table reported). Grünberg expects more N plans to follow soon: “Four other plans have already been confirmed and are in the final stages, and at least ten have been announced in total.”
These packages of measures by the various players are not yet aligned, says Gruenberg. “All of this is new territory for the various policy areas. The level of detail will continue to grow, and there will certainly be temporary contradictions from time to time.” But that’s actually a good sign, the Merics expert believes. “Because the contradictions show how much activity there is right now. Everyone has heard the signal and is now building their own climate protection plans. Coordinating all these policies is just extremely complicated.” That would take time.
Economic trends and crises, as well reactions from politics, also have an immediate impact on power consumption and emissions. In the third quarter, China’s emissions again dropped year-on-year for the first time. They were 0.5 percent below the previous year. In the first half of the year, they had been nine percent higher year-on-year than at the beginning of 2020 due to the Covid pandemic in early 2020 and the rapid recovery in early 2021.
However, other experts see an overall positive trend behind the crisis-related fluctuations. “The year-on-year decline in emissions from fossil fuels and cement is a marked turnaround,” writes China expert Lauri Myllyvirta of the Centre for Research on Energy and Clean Air (CREA) in Helsinki. Myllyvirta sees the reasons for this in the mishmash of policy decisions: “Sky-high coal prices affect industrial users directly, as they purchase coal on the market, while industrial electricity demand has also been affected due to electricity rationing.” Steel and cement production are down as a result of the crippled construction sector.
So what exactly did the economic conference decide? As expected, it invoked stability in the economic system. The word appeared 25 times in the final paper. Even in the Covid year, there were only 13 mentions. Beijing identified the secure supply of primary commodities such as agricultural products, minerals, and power as one of five “significant theoretical and practical issues.” But the paper also counted targeted carbon neutrality among these five.
There are only a few lines on climate in the document. But these include two significant changes:
According to the paper, the phase-out of fossil fuels should be based on “safe and reliable alternative energy sources”. But it also stated that China should use coal in a “clean and efficient way” because it will continue to be the foundation of power generation for the time being. After the conference, State leader Xi Jinping urged local cadres to adjust their approach to implementing national CO2 emissions targets. The fact that the provinces turned off the power in the summer and autumn to meet their 2021 power consumption targets was one of the causes of the current electricity crisis after all.
The paper was the first official document to speak of a “phase-out of fossil fuels“, Lauri Myllyvirta praised. But at the same time, the text praises “clean coal”. So much is still unclear. “The key question for China’s climate change efforts will be whether new investment actually flows into low-carbon and clean projects.”
The fact that fossil raw materials for industrial production will no longer be subject to limits in the future has consequences for a wide variety of sectors. Climate analyst Yan Qin of Refinitiv sees “quite a boost for coal chemicals”. But interestingly, according to a report in the South China Morning Post, supply chains for the expansion of wind and photovoltaic plants will also benefit. This is because these also contain fossil raw materials, which were previously capped. This has occasionally led to supply bottlenecks, the paper writes, citing Citic analysts.
In any case, the sensible thing is to switch the parameters for decarbonization from power consumption to CO2 emissions. “You no longer want to mandate how much power a company or an industry may consume,” says Gruenberg: “But how climate-damaging this power could be.” That would make sense because power consumption will continue to rise in China no matter what. “It would make little sense to cap economic development if the power used is clean.”
Ma Jun, director of the independent Institute of Public and Environmental Affairs in Beijing, also welcomed the reform. But now, a concrete cap on CO2 emissions is urgently required that “will send a clear signal to local governments, companies and the society to better guide their transformation and investment.”
According to Gruenberg, the Chinese currently consume only about half as much power per capita as the OECD average. So far, however, wind and solar power contribute only about nine percent to China’s power generation. This is another reason why an expansion is urgently needed – and at the same time, why a quick end for coal is not very realistic.
Gruenberg, also believes that change is also complicated by the fact that it is not just about climate, but also about social issues in addition to economics and energy. “Heavy industry, gas or coal production are huge and have a huge social footprint.” It is unclear where the jobs that are expected to disappear in these industries (China.Table reported) can be recreated. Coal provinces such as Shanxi therefore face a transformation that is likely to far dwarf the transitional problems of German coalfields.
The idea of establishing a platform for dialogue with China came to CSU Member of the German Bundestag Hans-Peter Friedrich during a visit to the Middle Kingdom two years ago – at that time still in the position of Vice President of the Bundestag. The idea of the association founded only a few months later is evident from its name: The China Bridge is to become the eastern counterpart to the Atlantic Bridge in the west.
Nevertheless, the two initiatives can hardly be compared. The Atlantic Bridge aims to strengthen cooperation between two states based on a common value system. “The China Bridge is an organization that was founded in regard to the joint global responsibility of Europe and China,” says Friedrich. It is about finding common ways and standards in living together, he says.
The founding phase of the association between fall 2019 and early 2020 came at the worst possible time. The China Bridge thrives on networking and exchange – but then the pandemic hit with its restrictions. Still, the China Bridge is growing constantly. “We now have 60 to 70 members, each with a huge network in China as well as in Germany,” Friedrich tells us. In the current situation, specialized dialog forums are being held digitally. There are expert panel discussions in the areas of financial and economic policy, as well as culture and health. Friedrich is in charge of the political discussion forum. Recently, the German head of Chinese EV manufacturer Nio was a guest.
But the budget of the association remains quite small at the moment. However, Friedrich explains that this is quite intentional: “We are financed only by membership fees and funds from two small German medium-sized companies. The association deliberately refrains from using funds from China – partly to dispel critics’ claims that the bridge is Xi Jinping’s extended arm in Berlin. Nevertheless, the founding of the association drew considerable criticism. Friedrich comments ironically: “I wondered why someone hadn’t founded a counterpart to the Atlantic Bridge earlier. After the hysterical and unfair criticism it received, I now know why.”
The first time Friedrich visited China was more than 20 years ago in Wuhan. His interaction with China is shaped by his work as a politician in the fields of interior and economic policy. For him, it’s not about geopolitical systemic competition, but a path to cooperation.
“I have great respect for this culture that has emerged quite apart from our European one,” Friedrich says. “I don’t believe in change through trade. The Chinese will not renounce their values in cooperation and neither will we.” For him, it is a matter of mutual respect. As soon as the situation once again allows it, the personal exchange will finally happen in China as well. “The idea was to send a delegation at some point,” says Friedrich. “Right now, however, we would also be happy if we could hold our general meeting in Germany in person.”David Renke
Children in Suining welcome the new calendar year. There are no tigers to be seen yet; they will be there for the Chinese New Year on February 1st. But China is allowed to toast a happy 2022 twice.
China.Table wishes you a happy and prosperous new year. Over the next four weeks, we are getting ready for the Chinese New Year on February 1st. We’ll be ready for the Tigers.
This Monday, our CEO Talk with Frank Sieren is all about the hotel industry. Ilja Poepper is an expert in the hotel business in China. He was the only European top manager at the Chinese conglomerate Dalian Wanda. Now, he is the Regional Vice President for marketing in Asia at Kempinski. He tells us about rich Chinese who easily spend several thousand euros for an overnight stay – only to order food from delivery services. Clever management must also be ready for this. Anyone involved in Chinese marketing will also take notice of something else: Poepper is convinced that approaching influencers is key for success in China.
He also tells of his interactions with Wang Jianlin, the founder of the Wanda Group. He has a military leadership style. But a high level of discipline makes it possible to complete complex projects on schedule. “There were no excuses or developments like at the new Berlin airport,” says Poepper.
China just likes to stay on schedule. However, anyone who is clinging to this fact will be left confused by present events when looking at climate policy. While China only brought lukewarm plans to the international climate conference, it could exceed them by far, as current assessments show. At the same time, economic planners are sending contradictory signals in favor of coal. Christiane Kühl leads you through the maze of Chinese climate plans in her feature.
On January 1st, the free trade mechanism RCEP was launched – if you are interested in the details, China.Table has got you covered. And if you did not open China.Table during the holidays, we would like to draw your attention to our interview with sinologist Klaus Muehlhahn. In his forecast for 2022, he puts the signals of Chinese domestic and foreign policy into perspective. His message doesn’t bode well for foreign trade: China is now systematically beginning to use the supply chain to exert pressure.
Have a pleasant start to this special week!
Ilja Poepper (50) is Vice President Sales & Marketing of Kempinski Hotels in Asia. Poepper is already the second generation to live in Beijing. His father was the head of Alcatel SEL in China and co-founded the German business community in Beijing in the mid-1980s, which later became the AHK.
His son Ilya went to the German School in Beijing and later attended the Steigenberger Academy in Bad Reichenhall, one of the most renowned schools for hotel management. Nevertheless, things were not just handed to him for free – on the contrary – he has worked his way up through the Chinese hotel business: Hsi tenures included Intercontinental, Holiday Inn, Crowne Plaza, and Howard Johnson. In 2012, he was appointed Vice President at the Chinese real estate group Wanda.
At Wanda, he was involved in the development of the first Chinese luxury hotel group and the opening of 76 hotels in six years. Here, Poepper was responsible for a turnover of $1.1 billion and greatly exceeded profit expectations. After this stressful success, he was finally able to fulfill his dream and just do nothing for a whole year while sailing in Southeast Asia, as well as Lake Constance. In 2019, he then joined Kempinski, the oldest European luxury hotel group based in Geneva.
Click here to view the full interview in German.
What does a German luxury hotel group have to do to be successful in the face of tough competition in Asia?
You have to be fast and agile. No other market is as dynamic and changes as quickly as the Asian market. Many hotel groups focus on volume and become bigger and bigger by buying up other hotel groups. Even the employees of these groups sometimes lose track of their brands. The Marriott Group, for example, has ten different luxury brands. And in this predatory market, we at Kempinski Hotels strive to be different: small but mighty.
But is that enough to succeed in booming Asia?
That alone is not enough, but we also have a fascinating history. 125 years ago, our founder Berthold Kempinski already began to build up our company through the wine trade and a restaurant in Berlin. And today, excellent restaurants are still at the heart of our hotels. In Beijing’s Kempinski Hotel alone, we operate half a dozen successful restaurants, including the Paulaner, which has been a focal point for fine German cuisine in the city for decades.
Don’t other hotels have restaurants as well?
That alone is certainly not enough. Our hotels are icons with individual character, be it the Hotel Adlon Kempinski Berlin at the Brandenburg Gate, the Hotel Vier Jahreszeiten Kempinski in Munich’s Maximilianstrasse, or even the Beijing Kempinski in the Lufthansa Center, which after 30 years, is indispensable in modern Beijing. Nanjing, on the other hand, is home to the tallest Kempinski, with a lobby on the 53rd floor. Because we have less than 80 hotels worldwide and not hundreds or thousands like some other hotel groups, we can afford to emphasize the individuality of each hotel. The customers take notice of that.
How many hotels do you manage?
In Asia, I am in charge of 30 hotels, a number that still allows me to deal extensively with each one and to visit each one personally at least twice a year – if normal travel is possible.
And with the Beijing Hotel Nuo Forbidden City, you just acquired a rather special hotel.
The hotel is unique in Beijing. It is located near the Forbidden City and was built in 1910 in the French style with stucco and very high ceilings. Chiang Kai-shek, the opponent of Mao Zedong, stayed there just like Mao. Or China’s last emperor or the former US president Jimmy Carter. The hotel has a stunning ballroom and bar with still original wooden flooring, on which many generations have danced. Plus: incredible chandeliers. During renovations, we found the historical menus and will recreate them to be just as they were in the old days.
Will that even work with young Chinese?
If you have the right KOLs, the key opinion leaders, you can do it. China also works differently than the West in this regard. Here, social media is everything. Influencers are the be-all and end-all of success. In some luxury hotels, five influencers rent a room and then take turns playing rich hotel guests. And such a historic building naturally brings lots of good social media pictures.
This hotel will not be called Kempinski, but Nuo. Why a new brand?
We decided with our Chinese partner, Beijing Tourism Group, to build a Chinese luxury group that is younger and more experimental. It is a great challenge for us to combine this traditional Chinese hotel with such a young brand.
You also just opened another Nuo that works quite differently.
Yes, a themed hotel with Big Panda or Harry Potter rooms in the Universal Studios amusement park, one of the largest in the world here in Beijing. Here, the room prices are between €400 and €500 per night, the suite prices are around €1,000. Right from the start, we were overbooked here and the park sold $45 million worth of tickets in the first twelve hours of opening. That’s insane. And this is how our Chinese hotel brand is growing with a lot of German know-how. When we opened our first Kempinski hotel in China in 1992, our guests had to fight to get a room because there were hardly any good hotels. Now, we have to prove ourselves amongst tough competition.
This requires skilled staff.
This is one of our biggest challenges. New hotels are being built faster than the hotel schools can train staff. So the prices go up and the fluctuation is enormous.
How are Chinese customers different from Western customers?
Young Chinese customers are less loyal than the somewhat more mature customers in the West. That’s why we always have to come up with something new in China, whereas in the West they often prefer the tried and true and traditional. And you have to be prepared for things to change quickly, especially in these Corona times. On any given day, we have over 70 percent occupancy in China. In Beijing, as much as 80 percent. And, then another Corona situation comes along and the next day, occupancy suddenly plummets to 30 percent, even though there are very few Corona cases in China. The hotel business has become even more fast-paced because of Corona. Whereas bookings used to be made ten days in advance, now it’s zero to three days. We have conferences with 500 rooms for three nights and a large banquet, they get booked between one and seven days in advance. If you don’t manage this flexibly and intelligently, you’ve lost the customer.
What annoys you about Chinese customers?
Annoying is the wrong way to put it, but the guests take different liberties than in the West. For example, they order their food from outside to the hotel. Then they walk through our beautiful 5-star hotel in bathrobe and slippers to pick up their noodles at the entrance. Yet they pay €3,400 a night. That’s where we need to rethink. We have to make it possible that they can also order the noodles via the hotel using a WeChat QR code and have them delivered to the room within five minutes, guaranteed. This works, even though the guest only saves the equivalent of three euros.
But if you introduce this, you will lose an important source of revenue.
Food is important and even more so in China. At the same time, food is also a complex source of income with high upfront costs. You have to buy ingredients, you need waiters. And then guests like to bring their own wine or liquor with the meal.
People like you, who know both cultures, are in particular in demand. You are already the second generation to live in China.
Yes. Chinese often say that Chinese, who have been living in the West for a long time, are like bananas: yellow on the outside and white on the inside. People like me are said to be like eggs, white on the outside and yellow on the inside. I’ll take that as a compliment.
Was there never an option for you to live permanently in Germany again?
Actually, no. As long as I’m working, I like to be where things are happening, and that’s here in China. And I think that will still be the case in 10 or 20 years. This is where the growth is, where the action is. This is where you have to be fast. And if you’re fast, you stay young. I remember when it took 24 hours to go to Shanghai by night train, today it’s just under 5 hours. And soon it will be only 90 minutes.
And the downside?
Some cities have lost their soul and all look the same. And the elbow society is getting stronger. In the past, people didn’t fight each other, but rather with each other. They absorbed the new things from the West, in the 80s it was cigarettes, Modern Talking, refrigerators, or Richard Clayderman. And anyone who knew a foreigner personally was very proud. Then came the trips to the West.
Now everything is at a standstill because of Covid.
Yes. I haven’t seen my mother and brothers, who now live in Berlin, for years. I used to go there at least twice a year. That’s what’s missing in Beijing: you can already see the consequences of closed borders in everyday life among the Chinese. They are no longer as international as they used to be. Around 150 million people were still abroad in 2019. This year it would probably have been 180 million.
Are they missing from the Adlon in Berlin?
Yes, and not only there. In Moscow, in St. Petersburg, in Africa, and in St. Moritz. In return, the Chinese now travel more within the country. In Beijing, for example, it’s 40 minutes to the Great Wall to Yanqi Lake, where we run a Kempinski hotel that looks like the rising sun, and on weekends, room rates here are easily between €300 and €400. So there are a lot of destinations that are now doing better than in 2019. If you have a hotel on the tropical island of Hainan, you have better occupancy than ever. Business is booming there.
But the industry is also suffering from overcapacity.
Yes, but less in the luxury sector. There are still far fewer top hotels per capita than in the US. In Shanghai, for example, our hotel has 700 rooms, an occupancy rate of 80 percent, with an average rate of over $200. So it’s worth opening more hotels.
Does this apply to all regions?
No. I would be careful with the Sanya region. People also love Thailand, which is not much farther from Beijing. And when the borders reopen, they will go there again, to another exciting culture.
How is the hotel industry changing?
I don’t want to scare my employees, but digitalization means that one person can sell as much today as ten sales managers used to. And what will be in ten years, we don’t know today anyway. We simply can’t imagine it. So it’s important to remain open to change.
But you have also experienced faster times, where you opened a new hotel every month.
Yes, when I worked at the Wanda Group. That was probably the fastest-growing hotel group in history. 76 hotels in six years and each had an average of around 300 rooms. I had months where I opened three hotels at the same time. That was an incredibly exhausting time, but I wouldn’t want to miss it because I learned an incredible amount. And I was allowed to work closely with Wang Jianlin, founder of the group and one of the richest Chinese. It was a very rewarding time, and I’m very proud of it. But you don’t do that forever.
He certainly wasn’t easy as a boss.
What took some getting used to was the military way he ran the company. If you were five minutes late for a meeting with him, you had to expect a cut of your bonus. But such growth is only possible with this iron discipline. If a new house was to be opened on October 1, it indeed happened on that date. There were no excuses or developments like at the new Berlin airport. If you don’t build up pressure on projects like this, you can’t keep up the pace. And to make it clear what a delay costs and that it is impossible to let the future guest down, Wang had banquets sold for this period months in advance.
Another example?
During my time at Wanda, I learned from a headhunter that my position was posted. I was shocked because I was loyal and had received a great evaluation. They told me then that they were also very happy with me. But you know, you should never feel comfortable at Wanda. You should always be a little scared. Because if you think you’re safe, you don’t do your job well. Then you become lazy. So it’s no wonder that after six years I first needed some time off.
Is that the same at Kempinski?
No. At Kempinski Hotels, they know that progress does not only come from pressure, but also from calmly thinking about where the journey should go. And that a reasonable work-life balance is also good for the quality of the work.
In 2019, the Steigenberger Group was sold to the Chinese. Can this work out?
If they see it as the icing on the cake of their hotel group with around 500 hotels, using customer data and leaving management alone, yes. But to make it a Chinese company would be wrong.
If you look five years into the future now, what are your biggest challenges? What do you need to work on?
I think we will have to live with the virus for the next ten years at least. The business with business travelers, but also with events and conferences will not come back like it used to. We have to adapt to a more individual business, offer more for families who stay over the weekend. To do that, we have to adapt the cuisine, because family dinners are different from business dinners. There is no need to have thousands of calories on the table anymore.
And, once you no longer have to work, where will you live? In a Chinese luxury resort?
No. I will live in the greatest luxury there is: in nature. I would then live by Lake Constance, enjoy the good air, the peace and quiet, and the healthy Lake Constance cuisine. I miss that already today: the great view of the Swiss mountains, walks in the vineyards and then in the late afternoon a “Viertele schlotzen”, as they say there. But until then, I want to ride the wave of fascinating Chinese growth for a while.
China is also struggling to find the most efficient regulations for the shift to climate neutrality. The transformation of the energy sector and heavy industry are the most difficult challenges. Currently, it looks as if one part of the Chinese leadership is stepping on the gas while the other one is pulling the brake. Over the New Year, the government’s Development Research Center published a report suggesting that the CO2 turnaround could come two years earlier than previously expected. Greenhouse gas emissions could peak as early as 2028, not 2030, according to government researchers. The reasons are lower growth and faster take-up of climate protection measures.
In December, however, the Central Economic Work Conference of the Communist leadership had sent quite different signals: Is the emphasis on coal as the “basis” of the power supply until 2030 to be understood as an imminent boom in fossil fuels? Is China also saying bidding farewell to climate targets with the end of power-saving caps? Or aren’t the emissions quotas that will be introduced the better measure anyway? Observers were initially both concerned and optimistic.
Nis Gruenberg, a climate expert at the Mercator Institute for China Studies (Merics), sees the latest developments as a continuation of previous climate policy. According to Gruenberg, the formulated rates do not contradict China’s so-called 30/60 targets: peak emissions before 2030, climate neutrality by 2060 at the latest. “One problem in the analysis is that many things are currently happening on different tracks at the same time,” says Gruenberg. At the Central Economic Work Conference, the focus had been on macroeconomic issues and the role of power consumption and greenhouse gasses in industry. “This tends to only broadly outline issues such as climate or the environment.”
At the same time, other offices of the party and the government are dealing with climate protection. For example, both the central government’s Five-Year plans as well as the individual plans for specific industries or ministries include climate targets. The most concrete, however, are the so-called 1+N plans according to Gruenberg: “They form the top-level framework for decarbonization. These plans show how China’s economy is to be trimmed toward the 30/60 targets. They deal with sectors, industries, and technologies.” The first N action plan was issued in October and addresses the path to 2030 (China.Table reported). Grünberg expects more N plans to follow soon: “Four other plans have already been confirmed and are in the final stages, and at least ten have been announced in total.”
These packages of measures by the various players are not yet aligned, says Gruenberg. “All of this is new territory for the various policy areas. The level of detail will continue to grow, and there will certainly be temporary contradictions from time to time.” But that’s actually a good sign, the Merics expert believes. “Because the contradictions show how much activity there is right now. Everyone has heard the signal and is now building their own climate protection plans. Coordinating all these policies is just extremely complicated.” That would take time.
Economic trends and crises, as well reactions from politics, also have an immediate impact on power consumption and emissions. In the third quarter, China’s emissions again dropped year-on-year for the first time. They were 0.5 percent below the previous year. In the first half of the year, they had been nine percent higher year-on-year than at the beginning of 2020 due to the Covid pandemic in early 2020 and the rapid recovery in early 2021.
However, other experts see an overall positive trend behind the crisis-related fluctuations. “The year-on-year decline in emissions from fossil fuels and cement is a marked turnaround,” writes China expert Lauri Myllyvirta of the Centre for Research on Energy and Clean Air (CREA) in Helsinki. Myllyvirta sees the reasons for this in the mishmash of policy decisions: “Sky-high coal prices affect industrial users directly, as they purchase coal on the market, while industrial electricity demand has also been affected due to electricity rationing.” Steel and cement production are down as a result of the crippled construction sector.
So what exactly did the economic conference decide? As expected, it invoked stability in the economic system. The word appeared 25 times in the final paper. Even in the Covid year, there were only 13 mentions. Beijing identified the secure supply of primary commodities such as agricultural products, minerals, and power as one of five “significant theoretical and practical issues.” But the paper also counted targeted carbon neutrality among these five.
There are only a few lines on climate in the document. But these include two significant changes:
According to the paper, the phase-out of fossil fuels should be based on “safe and reliable alternative energy sources”. But it also stated that China should use coal in a “clean and efficient way” because it will continue to be the foundation of power generation for the time being. After the conference, State leader Xi Jinping urged local cadres to adjust their approach to implementing national CO2 emissions targets. The fact that the provinces turned off the power in the summer and autumn to meet their 2021 power consumption targets was one of the causes of the current electricity crisis after all.
The paper was the first official document to speak of a “phase-out of fossil fuels“, Lauri Myllyvirta praised. But at the same time, the text praises “clean coal”. So much is still unclear. “The key question for China’s climate change efforts will be whether new investment actually flows into low-carbon and clean projects.”
The fact that fossil raw materials for industrial production will no longer be subject to limits in the future has consequences for a wide variety of sectors. Climate analyst Yan Qin of Refinitiv sees “quite a boost for coal chemicals”. But interestingly, according to a report in the South China Morning Post, supply chains for the expansion of wind and photovoltaic plants will also benefit. This is because these also contain fossil raw materials, which were previously capped. This has occasionally led to supply bottlenecks, the paper writes, citing Citic analysts.
In any case, the sensible thing is to switch the parameters for decarbonization from power consumption to CO2 emissions. “You no longer want to mandate how much power a company or an industry may consume,” says Gruenberg: “But how climate-damaging this power could be.” That would make sense because power consumption will continue to rise in China no matter what. “It would make little sense to cap economic development if the power used is clean.”
Ma Jun, director of the independent Institute of Public and Environmental Affairs in Beijing, also welcomed the reform. But now, a concrete cap on CO2 emissions is urgently required that “will send a clear signal to local governments, companies and the society to better guide their transformation and investment.”
According to Gruenberg, the Chinese currently consume only about half as much power per capita as the OECD average. So far, however, wind and solar power contribute only about nine percent to China’s power generation. This is another reason why an expansion is urgently needed – and at the same time, why a quick end for coal is not very realistic.
Gruenberg, also believes that change is also complicated by the fact that it is not just about climate, but also about social issues in addition to economics and energy. “Heavy industry, gas or coal production are huge and have a huge social footprint.” It is unclear where the jobs that are expected to disappear in these industries (China.Table reported) can be recreated. Coal provinces such as Shanxi therefore face a transformation that is likely to far dwarf the transitional problems of German coalfields.
The idea of establishing a platform for dialogue with China came to CSU Member of the German Bundestag Hans-Peter Friedrich during a visit to the Middle Kingdom two years ago – at that time still in the position of Vice President of the Bundestag. The idea of the association founded only a few months later is evident from its name: The China Bridge is to become the eastern counterpart to the Atlantic Bridge in the west.
Nevertheless, the two initiatives can hardly be compared. The Atlantic Bridge aims to strengthen cooperation between two states based on a common value system. “The China Bridge is an organization that was founded in regard to the joint global responsibility of Europe and China,” says Friedrich. It is about finding common ways and standards in living together, he says.
The founding phase of the association between fall 2019 and early 2020 came at the worst possible time. The China Bridge thrives on networking and exchange – but then the pandemic hit with its restrictions. Still, the China Bridge is growing constantly. “We now have 60 to 70 members, each with a huge network in China as well as in Germany,” Friedrich tells us. In the current situation, specialized dialog forums are being held digitally. There are expert panel discussions in the areas of financial and economic policy, as well as culture and health. Friedrich is in charge of the political discussion forum. Recently, the German head of Chinese EV manufacturer Nio was a guest.
But the budget of the association remains quite small at the moment. However, Friedrich explains that this is quite intentional: “We are financed only by membership fees and funds from two small German medium-sized companies. The association deliberately refrains from using funds from China – partly to dispel critics’ claims that the bridge is Xi Jinping’s extended arm in Berlin. Nevertheless, the founding of the association drew considerable criticism. Friedrich comments ironically: “I wondered why someone hadn’t founded a counterpart to the Atlantic Bridge earlier. After the hysterical and unfair criticism it received, I now know why.”
The first time Friedrich visited China was more than 20 years ago in Wuhan. His interaction with China is shaped by his work as a politician in the fields of interior and economic policy. For him, it’s not about geopolitical systemic competition, but a path to cooperation.
“I have great respect for this culture that has emerged quite apart from our European one,” Friedrich says. “I don’t believe in change through trade. The Chinese will not renounce their values in cooperation and neither will we.” For him, it is a matter of mutual respect. As soon as the situation once again allows it, the personal exchange will finally happen in China as well. “The idea was to send a delegation at some point,” says Friedrich. “Right now, however, we would also be happy if we could hold our general meeting in Germany in person.”David Renke
Children in Suining welcome the new calendar year. There are no tigers to be seen yet; they will be there for the Chinese New Year on February 1st. But China is allowed to toast a happy 2022 twice.
