When Chinese household appliance manufacturer Midea bought Kuka six years ago, there was a great uproar that the German robot manufacturer was willingly handing over German expertise and technology to China. Kuka exemplified the sell-out of Germany. Today, the Chinese parent company Midea plans to take the next big step in the Kuka affair. Frank Sieren takes this as an opportunity to take stock of whether the takeover has paid off for the Chinese owner so far.
A few weeks ago, China came up with a special surprise: Beijing suddenly ratified two international labor conventions and thus vowed to prevent any potential forced labor by all means. So it is rather fitting that the annual conference of the International Labor Organization will take place in Geneva in a few days. There, China will be faced with accusations that do not shed a good light on the People’s Republic. So Marcel Grzanna took a closer look at what measures the UN organization could take against China.
I would also like to draw your attention to today’s Profile: It is about a young Chinese man who vanished at the age of six – and has not been seen since. We are talking about Gedhun Choekyi Nyima, better known as the Panchen Lama, the spiritual deputy of the Tibetan faith. And this is precisely why the situation is so explosive.
Kuka, Germany’s largest industrial robot manufacturer, has made a successful start to the new fiscal year. Between January and March, the Augsburg-based group’s revenue rose by 18.3 percent to €853.4 million. At just under €1.3 billion, Kuka also recorded an about 42 percent higher contract volume. The number of orders in China even doubled. Local sales increased by 61.2 percent. Germany and the USA remain the biggest markets for the company, with 28 and 27 percent respectively. However, China follows in third place with 17 percent.
From the Chinese management’s perspective, it is also high time that Kuka finally delivers what the name promised its new owners. Kuka’s revenue had been at a crawl for years: Its €3.3 billion in 2021 was only a slight improvement on its €2.9 billion in 2016. Midea’s Vice President Andy Gu had already applied pressure and was “definitely not satisfied” with Kuka’s performance. This is one of the reasons why the new CEO Peter Mohnen is now assisted by Chinese CFO Alexander Tan.
The start of the new year could at least provide the hoped-for momentum. Especially since projections are good. According to a report by auditing company KPMG, Kuka plans to increase sales in China by 30 percent annually until 2024. By 2027, sales in the People’s Republic are expected to climb from €589 million to €2.35 billion. That would be 40 percent of total revenues, which are then to be generated primarily with small robots and software tailored to the Chinese market.
In 2016, the majority of Kuka was taken over by the Chinese household appliance manufacturer Midea. This was also because there were no other bids from the West. As a result, the German government even amended the Foreign Trade and Payments Act to have more say in company acquisitions in the future. In the meantime, more than 95 percent of Kuka shares are now owned by Midea. It was recently announced that the last small German shareholders are to be bought out of the company at the annual general meeting on May 17. The company had also surprisingly announced its withdrawal from the stock market in November.
This should allow the company to grow in peace, free from the constraints of having to report quarterly figures. After all, Kuka does not need money from stock market investors. The parent company has enough. Between 2016 and 2021, Midea’s sales more than doubled to over $53 billion. Profit developed similarly.
The discrepancy between Midea’s success and Kuka’s side-steps has put pressure on Kuka’s management. Even though the two sectors can only be compared to a limited extent, and Kuka’s market position is different. The global market shares of the Japanese market leader Fanuc and the Swiss-Swedish robot manufacturer ABB are each almost twice as large as Kuka’s. They are followed by a Japanese and an Italian manufacturer. Kuka ranks fifth, the same as in 2016.
Midea plans to invest around €800 million in Kuka’s R&D by 2025. More than ever before. “A lion’s share of this will go to Augsburg,” Mohnen emphasizes, “because that’s where we develop controls, software, and mechatronics.”
The works council is on board. Supervisory Board Vice Chairman Michael Leppek from trade union IG Metall supports the move: “We are giving up a less effective stock market listing in exchange for a joint growth plan and long-term commitments for Kuka with a focus on production and technologies.”
So the bond holds for the moment: The Chinese need the expertise of the Germans; the Germans need the money and the network in China. But one thing is clear: development and production must also always take place in China. Kuka already manufactures in Shanghai and Shunde in the southern Chinese province of Guangdong, Midea’s main site.
Life insurance for Augsburg: staying ahead of the Chinese in research and development. In 2021, Kuka presented parts of a new operating system at the digital trade fair Hannover Messe, which is intended to make programming robots as easy as working on a computer.
Although China already has the biggest stock of industrial robots, a large part still comes from foreign production. In 2020 alone, 168,000 new robots were installed in China. According to the industry association IFR, the market share of foreign suppliers was most recently 73 percent.
Beijing wants to change that as soon as possible and has included a second development plan for robotics in the 14th Five-Year Plan. Robotics is “the key technology of modern industry,” explained Song Xiaogang, Secretary-General of the China Robot Industry Alliance (CRIA).
When it comes to robot density – machines per 10,000 workers – China ranks ninth in the global ranking with 246 units. In 2017, it was still 25th with 49 robots. The global leader in industrial robots is currently South Korea. Here, for every 10,000 workers, there were 932 robots in 2020. Germany ranks fourth with 371.
Kuka’s opportunity as a Chinese company: Globally, Chinese robot manufacturers hardly play a role. On the domestic market, local suppliers like Efort and Siasun recently shipped around 45,000 robots, which corresponds to a market share of 27 percent. Two-thirds of the market is thus still served by foreign companies. Beijing wants to change that.
Since December, two assessments by the International Labor Organization (ILO) Commission of Experts have been on the table with far-reaching implications. However, they will only be able to unfold their full impact at the upcoming ILO annual conference starting on May 27 in Geneva. The 110th session of the UN organization will discuss details that dramatically give the People’s Republic of China a bad reputation.
In their report, the experts addressed numerous accusations made by the International Trade Union Confederation (ITUC). The People’s Republic reportedly violates international conventions through a “widespread and systematic” forced labor program, which primarily affects Uyghurs and other Muslim minorities.
The ITUC assumes that especially the detainees of Xinjiang’s internment camps are forced to work. It estimates that up to 1.8 million people are held captive there. Indicative of the large number is the growing dimensions of the camps. The ITUC has identified 39 of them, whose areas have tripled since 2017. In the report, the commission extensively reviewed gathered allegations and used them to formulate its recommendations to the Chinese government.
“The length of these statements on China suggests that the Commission wants to give these assessments strong attention. They are longer than is normally the case,” says Tim DeMeyer, ILO senior advisor in Geneva.
The session will provide a taste of how the ILO intends to respond to the accusations against China. Representatives of all member nations and the management will convene for about two weeks to discuss developments in individual countries and to work out and, at best, decide on how to improve global standards for workers and their employment conditions.
In the Commission’s statement, DeMeyer sees a “clear call to action” for the conference to push China to take corrective measures. But the Belgian, who also formerly headed the ILO office in Beijing, says: “The fact remains that despite the authority of the ILO supervisory system, we are always dealing with a sovereign state that can never be forced to act.” The only tool available remains diplomacy.
Words instead of punishment. The critical question in Geneva will thus be whether all parties will be able to move closer together from their different positions. Sinologist Bjoern Alpermann of the University of Wuerzburg remains skeptical. “I can’t imagine that China’s representatives will deviate even a little from the country’s official position. In this respect, the conference is more of a toothless tiger.”
The work of Adrian Zenz, whose meticulous research has revealed the extent and systematic nature of Uyghur forced labor in recent years, has played a significant role in the critical assessments by the ITUC and the ILO Commission of Experts. Zenz faced threats and defamation from the Chinese side, partly because he was said to be financed by the United States.
Sinologist Alpermann, on the other hand, speaks of “innovative pioneering work”. Even if he “criticizes individual details on the factual level. I tip my hat to it”. Alpermann considers the accusation that Zenz received US funding to be unfounded. “When it comes to which scientist is paid by whom, I probably couldn’t trust a single Chinese academic source anymore,” he says.
So far, Beijing has defended its position that the allegations of systematic forced labor are pure fabrications. Nevertheless, the ILO Commission had pointed to the allegations at the end of last year. Within the limits of its authority, the commission asked the Chinese government to take various steps to improve the situation. However, the experts had to address the problem in a roundabout way. At the time of publication of the report, Beijing had not yet ratified Conventions 29 and 105, which explicitly address forced labor. This happened only a few weeks ago and is therefore not relevant for the ILO report.
The allegations raised are instead discussed under Convention 111, ratified by China in January 2006. This is aimed at discrimination on the job market, for example when workers are prevented from freely choosing their jobs. Therefore, the Commission urges China to clarify its legislation against discrimination. ” If someone is working under coercion, they don’t have the freedom to choose their job,” says Senior Advisor DeMeyer. So the hope is to achieve progress on the issue of forced labor through greater protection against discrimination.
But either way, the ILO works at a snail’s pace, especially since China, with its seat on the board, can drag out a swift agreement on an action plan. At a minimum, it will likely take four or five years. But regardless of when a decision is made, the next step would be to establish an independent commission to thoroughly investigate the allegations. ” In all honesty, it should be noted that the Chinese government’s ratification of the forced labor conventions is a sign that the country is confident that it can resolve the allegations of forced labor,” DeMeyer says.
Should a commission conclude that the allegations are true, however, China would be legally obligated to prevent forced labor. But even in the event that this does not happen, the scope for sanctions by the ILO would be limited. This became clear in the example of Myanmar, which is the only country in history to have been sanctioned so far. The sanctions were limited to largely isolating Myanmar within the ILO and calling on member states to review their economic relations with Myanmar to see if they had contributed in any way to the use of forced labor.
It is exactly 27 years to the day that Gedhun Choekyi Nyima became the world’s youngest political prisoner. It was May 17, 1995, when Chinese security forces abducted the then six-year-old. To this day, there is no conclusive sign of life from Nyima. His parents also disappeared that day.
The official Communist Party version claims that the young man leads a normal life in China and does not want the public to know about it. Allegedly, he recently sent word that the world should respect his wish for privacy.
But why on earth would a nation see a six-year-old as a threat to its political system and kidnap him for that reason? The answer lies in Beijing’s deep-rooted concern that Buddhism could be stronger among the approximately five million Tibetans in the People’s Republic than their loyalty to the Party.
Nyima is a key figure in Tibetan Buddhism. His fate was sealed 27 years and three days ago. At that time, the Dalai Lama recognized the child as the reincarnation of the 11th Panchen Lama. As such, Nyima is the spiritual second in command of the Tibetan faith. In this role, he has crucial duties to fulfill for Tibetan Buddhism. He is responsible for seeking the reincarnation of the next Dalai Lama. The Panchen Lama is also responsible for his training and education.
But just three days after his designation, the child disappeared along with his parents. The CCP broke its own laws to shield the now 33-year-old man from the public eye. The search for him is all the more difficult because there is only one photo of Nyima, which shows him when he was six years old. In 2016, the International Campaign for Tibet (ICT) had an expert create a facial composite of the man based on this photo. It shows the Panchen Lama as he might look today.
Because the abduction is not forgotten outside the country and human rights groups remind people of Nyima’s fate year after year, the Chinese Foreign Office has to repeatedly comment on the matter. “The so-called spiritual boy is a normal Chinese citizen living a normal life,” its spokesman said in late April in response to questions about Nyima’s whereabouts.
The US State Department had taken the occasion of his 33rd birthday to issue a repeated statement. “We urge PRC authorities to account for Gedhun Choekyi Nyima’s whereabouts and well-being immediately and to allow him to fully exercise his human rights and fundamental freedoms, in line with the PRC’s international commitments,” it said. Beijing, on the other hand, referred to a “smear campaign” against China.
The regime even presented its own Panchen Lama years ago, who, in line with the Party’s ideology, is trying to get Tibetans on its side. Beijing’s hope is to get the Buddhists under control the way it has largely succeeded with the Catholics. The Party offers a compromise by not banning people’s faith as long as they practice it under the umbrella of communism. But the vast majority of Tibetans recognize this as a foul compromise because, in their opinion, the CCP offers only a shell, while stripping away the meaning of their faith. Marcel Grzanna
China always wants to fly high. And quite literally in this case: The Chinese airship Jimu No.1 was sent to a record altitude of 9,032 meters on Mount Everest. Its purpose there is to collect data on changes in the atmosphere.
When Chinese household appliance manufacturer Midea bought Kuka six years ago, there was a great uproar that the German robot manufacturer was willingly handing over German expertise and technology to China. Kuka exemplified the sell-out of Germany. Today, the Chinese parent company Midea plans to take the next big step in the Kuka affair. Frank Sieren takes this as an opportunity to take stock of whether the takeover has paid off for the Chinese owner so far.
A few weeks ago, China came up with a special surprise: Beijing suddenly ratified two international labor conventions and thus vowed to prevent any potential forced labor by all means. So it is rather fitting that the annual conference of the International Labor Organization will take place in Geneva in a few days. There, China will be faced with accusations that do not shed a good light on the People’s Republic. So Marcel Grzanna took a closer look at what measures the UN organization could take against China.
I would also like to draw your attention to today’s Profile: It is about a young Chinese man who vanished at the age of six – and has not been seen since. We are talking about Gedhun Choekyi Nyima, better known as the Panchen Lama, the spiritual deputy of the Tibetan faith. And this is precisely why the situation is so explosive.
Kuka, Germany’s largest industrial robot manufacturer, has made a successful start to the new fiscal year. Between January and March, the Augsburg-based group’s revenue rose by 18.3 percent to €853.4 million. At just under €1.3 billion, Kuka also recorded an about 42 percent higher contract volume. The number of orders in China even doubled. Local sales increased by 61.2 percent. Germany and the USA remain the biggest markets for the company, with 28 and 27 percent respectively. However, China follows in third place with 17 percent.
From the Chinese management’s perspective, it is also high time that Kuka finally delivers what the name promised its new owners. Kuka’s revenue had been at a crawl for years: Its €3.3 billion in 2021 was only a slight improvement on its €2.9 billion in 2016. Midea’s Vice President Andy Gu had already applied pressure and was “definitely not satisfied” with Kuka’s performance. This is one of the reasons why the new CEO Peter Mohnen is now assisted by Chinese CFO Alexander Tan.
The start of the new year could at least provide the hoped-for momentum. Especially since projections are good. According to a report by auditing company KPMG, Kuka plans to increase sales in China by 30 percent annually until 2024. By 2027, sales in the People’s Republic are expected to climb from €589 million to €2.35 billion. That would be 40 percent of total revenues, which are then to be generated primarily with small robots and software tailored to the Chinese market.
In 2016, the majority of Kuka was taken over by the Chinese household appliance manufacturer Midea. This was also because there were no other bids from the West. As a result, the German government even amended the Foreign Trade and Payments Act to have more say in company acquisitions in the future. In the meantime, more than 95 percent of Kuka shares are now owned by Midea. It was recently announced that the last small German shareholders are to be bought out of the company at the annual general meeting on May 17. The company had also surprisingly announced its withdrawal from the stock market in November.
This should allow the company to grow in peace, free from the constraints of having to report quarterly figures. After all, Kuka does not need money from stock market investors. The parent company has enough. Between 2016 and 2021, Midea’s sales more than doubled to over $53 billion. Profit developed similarly.
The discrepancy between Midea’s success and Kuka’s side-steps has put pressure on Kuka’s management. Even though the two sectors can only be compared to a limited extent, and Kuka’s market position is different. The global market shares of the Japanese market leader Fanuc and the Swiss-Swedish robot manufacturer ABB are each almost twice as large as Kuka’s. They are followed by a Japanese and an Italian manufacturer. Kuka ranks fifth, the same as in 2016.
Midea plans to invest around €800 million in Kuka’s R&D by 2025. More than ever before. “A lion’s share of this will go to Augsburg,” Mohnen emphasizes, “because that’s where we develop controls, software, and mechatronics.”
The works council is on board. Supervisory Board Vice Chairman Michael Leppek from trade union IG Metall supports the move: “We are giving up a less effective stock market listing in exchange for a joint growth plan and long-term commitments for Kuka with a focus on production and technologies.”
So the bond holds for the moment: The Chinese need the expertise of the Germans; the Germans need the money and the network in China. But one thing is clear: development and production must also always take place in China. Kuka already manufactures in Shanghai and Shunde in the southern Chinese province of Guangdong, Midea’s main site.
Life insurance for Augsburg: staying ahead of the Chinese in research and development. In 2021, Kuka presented parts of a new operating system at the digital trade fair Hannover Messe, which is intended to make programming robots as easy as working on a computer.
Although China already has the biggest stock of industrial robots, a large part still comes from foreign production. In 2020 alone, 168,000 new robots were installed in China. According to the industry association IFR, the market share of foreign suppliers was most recently 73 percent.
Beijing wants to change that as soon as possible and has included a second development plan for robotics in the 14th Five-Year Plan. Robotics is “the key technology of modern industry,” explained Song Xiaogang, Secretary-General of the China Robot Industry Alliance (CRIA).
When it comes to robot density – machines per 10,000 workers – China ranks ninth in the global ranking with 246 units. In 2017, it was still 25th with 49 robots. The global leader in industrial robots is currently South Korea. Here, for every 10,000 workers, there were 932 robots in 2020. Germany ranks fourth with 371.
Kuka’s opportunity as a Chinese company: Globally, Chinese robot manufacturers hardly play a role. On the domestic market, local suppliers like Efort and Siasun recently shipped around 45,000 robots, which corresponds to a market share of 27 percent. Two-thirds of the market is thus still served by foreign companies. Beijing wants to change that.
Since December, two assessments by the International Labor Organization (ILO) Commission of Experts have been on the table with far-reaching implications. However, they will only be able to unfold their full impact at the upcoming ILO annual conference starting on May 27 in Geneva. The 110th session of the UN organization will discuss details that dramatically give the People’s Republic of China a bad reputation.
In their report, the experts addressed numerous accusations made by the International Trade Union Confederation (ITUC). The People’s Republic reportedly violates international conventions through a “widespread and systematic” forced labor program, which primarily affects Uyghurs and other Muslim minorities.
The ITUC assumes that especially the detainees of Xinjiang’s internment camps are forced to work. It estimates that up to 1.8 million people are held captive there. Indicative of the large number is the growing dimensions of the camps. The ITUC has identified 39 of them, whose areas have tripled since 2017. In the report, the commission extensively reviewed gathered allegations and used them to formulate its recommendations to the Chinese government.
“The length of these statements on China suggests that the Commission wants to give these assessments strong attention. They are longer than is normally the case,” says Tim DeMeyer, ILO senior advisor in Geneva.
The session will provide a taste of how the ILO intends to respond to the accusations against China. Representatives of all member nations and the management will convene for about two weeks to discuss developments in individual countries and to work out and, at best, decide on how to improve global standards for workers and their employment conditions.
In the Commission’s statement, DeMeyer sees a “clear call to action” for the conference to push China to take corrective measures. But the Belgian, who also formerly headed the ILO office in Beijing, says: “The fact remains that despite the authority of the ILO supervisory system, we are always dealing with a sovereign state that can never be forced to act.” The only tool available remains diplomacy.
Words instead of punishment. The critical question in Geneva will thus be whether all parties will be able to move closer together from their different positions. Sinologist Bjoern Alpermann of the University of Wuerzburg remains skeptical. “I can’t imagine that China’s representatives will deviate even a little from the country’s official position. In this respect, the conference is more of a toothless tiger.”
The work of Adrian Zenz, whose meticulous research has revealed the extent and systematic nature of Uyghur forced labor in recent years, has played a significant role in the critical assessments by the ITUC and the ILO Commission of Experts. Zenz faced threats and defamation from the Chinese side, partly because he was said to be financed by the United States.
Sinologist Alpermann, on the other hand, speaks of “innovative pioneering work”. Even if he “criticizes individual details on the factual level. I tip my hat to it”. Alpermann considers the accusation that Zenz received US funding to be unfounded. “When it comes to which scientist is paid by whom, I probably couldn’t trust a single Chinese academic source anymore,” he says.
So far, Beijing has defended its position that the allegations of systematic forced labor are pure fabrications. Nevertheless, the ILO Commission had pointed to the allegations at the end of last year. Within the limits of its authority, the commission asked the Chinese government to take various steps to improve the situation. However, the experts had to address the problem in a roundabout way. At the time of publication of the report, Beijing had not yet ratified Conventions 29 and 105, which explicitly address forced labor. This happened only a few weeks ago and is therefore not relevant for the ILO report.
The allegations raised are instead discussed under Convention 111, ratified by China in January 2006. This is aimed at discrimination on the job market, for example when workers are prevented from freely choosing their jobs. Therefore, the Commission urges China to clarify its legislation against discrimination. ” If someone is working under coercion, they don’t have the freedom to choose their job,” says Senior Advisor DeMeyer. So the hope is to achieve progress on the issue of forced labor through greater protection against discrimination.
But either way, the ILO works at a snail’s pace, especially since China, with its seat on the board, can drag out a swift agreement on an action plan. At a minimum, it will likely take four or five years. But regardless of when a decision is made, the next step would be to establish an independent commission to thoroughly investigate the allegations. ” In all honesty, it should be noted that the Chinese government’s ratification of the forced labor conventions is a sign that the country is confident that it can resolve the allegations of forced labor,” DeMeyer says.
Should a commission conclude that the allegations are true, however, China would be legally obligated to prevent forced labor. But even in the event that this does not happen, the scope for sanctions by the ILO would be limited. This became clear in the example of Myanmar, which is the only country in history to have been sanctioned so far. The sanctions were limited to largely isolating Myanmar within the ILO and calling on member states to review their economic relations with Myanmar to see if they had contributed in any way to the use of forced labor.
It is exactly 27 years to the day that Gedhun Choekyi Nyima became the world’s youngest political prisoner. It was May 17, 1995, when Chinese security forces abducted the then six-year-old. To this day, there is no conclusive sign of life from Nyima. His parents also disappeared that day.
The official Communist Party version claims that the young man leads a normal life in China and does not want the public to know about it. Allegedly, he recently sent word that the world should respect his wish for privacy.
But why on earth would a nation see a six-year-old as a threat to its political system and kidnap him for that reason? The answer lies in Beijing’s deep-rooted concern that Buddhism could be stronger among the approximately five million Tibetans in the People’s Republic than their loyalty to the Party.
Nyima is a key figure in Tibetan Buddhism. His fate was sealed 27 years and three days ago. At that time, the Dalai Lama recognized the child as the reincarnation of the 11th Panchen Lama. As such, Nyima is the spiritual second in command of the Tibetan faith. In this role, he has crucial duties to fulfill for Tibetan Buddhism. He is responsible for seeking the reincarnation of the next Dalai Lama. The Panchen Lama is also responsible for his training and education.
But just three days after his designation, the child disappeared along with his parents. The CCP broke its own laws to shield the now 33-year-old man from the public eye. The search for him is all the more difficult because there is only one photo of Nyima, which shows him when he was six years old. In 2016, the International Campaign for Tibet (ICT) had an expert create a facial composite of the man based on this photo. It shows the Panchen Lama as he might look today.
Because the abduction is not forgotten outside the country and human rights groups remind people of Nyima’s fate year after year, the Chinese Foreign Office has to repeatedly comment on the matter. “The so-called spiritual boy is a normal Chinese citizen living a normal life,” its spokesman said in late April in response to questions about Nyima’s whereabouts.
The US State Department had taken the occasion of his 33rd birthday to issue a repeated statement. “We urge PRC authorities to account for Gedhun Choekyi Nyima’s whereabouts and well-being immediately and to allow him to fully exercise his human rights and fundamental freedoms, in line with the PRC’s international commitments,” it said. Beijing, on the other hand, referred to a “smear campaign” against China.
The regime even presented its own Panchen Lama years ago, who, in line with the Party’s ideology, is trying to get Tibetans on its side. Beijing’s hope is to get the Buddhists under control the way it has largely succeeded with the Catholics. The Party offers a compromise by not banning people’s faith as long as they practice it under the umbrella of communism. But the vast majority of Tibetans recognize this as a foul compromise because, in their opinion, the CCP offers only a shell, while stripping away the meaning of their faith. Marcel Grzanna
China always wants to fly high. And quite literally in this case: The Chinese airship Jimu No.1 was sent to a record altitude of 9,032 meters on Mount Everest. Its purpose there is to collect data on changes in the atmosphere.
