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Germany's Economic Machine Exporting to China

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In the green hills surrounding the idyllic town of Scwabusch-Gmund, snow has come early this year. The economy here is strong, unlike much of the rest of Europe. A local man, Tammo Haeber, an engineer creates the concepts to produce the software to go with the the machines, the robotics that his clients and contractors, such as Aalen-base SHW, sell to places like China, Brazil, India and Russia. These days roughly 50 percent of their business comes from China. Haeber adds that only 15 percent of their orders come from Europe, with another five percent from Brazil, and India and Russia sharing the rest.

"They have the money. When local clients do not pay on time, we have to call them up, and they basically say the money is on its way. But with China, you give them the bill, and you have your money immediately."

The German high-tech know how being bought up by the Chinese cannot be copied, thus making the German engineers indispensable to Chinese companies. The machines are also produced in Germany, then shipped, along with the German engineers, to China.

"When you buy a machine," Haeber confirms, "we set up the machine. We show you how this machine works then we break it down into parts and transfer it to you say in China. The clients show up in Germany with engineers to measure everything. If they order our machine and software, then they must put 30% down immediately, then before it leaves Germany, they pay another 40 percent so 70 percent of the total, when it arrives, 20 percent more is paid and they have 10 percent left in reserve to make sure it is all working well once installed in China."

But unforeseen realities come once the installation takes place, as often the machines do not work as they did back in Germany for reasons which can be difficult to figure out. Haeber describes one such situation in China:

The machine was set up in a new factory but it wasn't working correctly. We could not get accurate readings on the instruments and did not know why. Then I began to speak to this worker who was always hanging over my shoulder. I asked my interpreter to ask him what was located on this bit of land before they built the factory. Slowly I came to hear about this worker's life and how he had owned this piece of land and only sold it if they promised to give him a good job. His job was to follow me everywhere. He told me about fishing on the river on this land. I asked him where the river was located and then about the sand on the banks of the river and began to understand that the foundation of the factory was built on this sand and thus it was not stable. We had to dig down and rebuild a stable foundation and then place our machines on top of that. All of this came from understanding the history and how quickly things have been built in China.

They can't copy the technology which comes from the last twenty years of our focusing on the interface between software and hardware. We learn by doing and then share information with fellow engineers here in Germany, we touch and handle the equipment, the machines. There's no secret, it's just know-how.

But he admits that recently, the Chinese have destroyed the solar panel market abroad as they were able to copy the technology to produce the panels more inexpensively. The machine market focused on renewable energies is strong. China also subsidizes these industries to such a degree that even if someone comes up with a great idea they have no chance in competing in these markets as the Party still decides who will be given control of certain industries.

SHW describes itself on its website as "intelligent solutions for reducing fuel consumption and CO2 emissions." Tammo Haeber confirms that the old China of bicycles everywhere is gone. Now everyone has a car or an electric bicycle. Some of the biggest Chinese clients are factories building automobiles as well as those creating components for renewable energy such as solar. "Windmill machines everything from the connections, the rotors, the clutch, is all German high tech engineering, and we install it then they watch and copy it."

Haeber does not even have to advertise as clients find him by referral. His main concern is that he will not have enough well-trained workers in Germany or all of the orders he must complete in the years to come.

"For the past three years, I have spent two of them in China. But when we create software, and build machines first back home in Germany, we cannot be assured they will work correctly in China. We German engineers are pedantic, focused on facts, not conversations. Everything in your master plan has been well-researched, and you cannot just make a show of it, it's not possible as there is so much money behind what we are doing. To have it under control is part of the art."

When Haeber and his engineers travel to Brazil or China, the clients have so many workers around, that when the Germans arrive with the machines and equipment, there is always a great hope that this new technology will bring the client's company forward. But these workers who build these factories, cannot afford the cars the company makes. They are often the poorest of the poor and sometimes are living in containers working 24-hour shifts. They cannot go to bed until the worker sleeping in their shared bed gets up and goes to work.

"H&M, Mattel, I have seen how they are doing production there in China. In Germany even painting a metal part means wearing a protective suit, these Chinese workers have nothing to protect them."

In China, the clients continue to ask for more equipment, and more recently have been coming to Germany and Austria and buying up the companies themselves. But the standards are so far from how the Europeans work, it is inconceivable that the safety precautions expected in the EU factories will ever even be discussed in China. It is so much cheaper to produce in China and then transport products back to the rest of the world, that Haeber says the real problem is the low transportation costs. This is what is creating all of the pollution, more than anything else.

Perhaps the most glaring difference between how workers in Germany and workers in China is reflected in the empty ghost towns of skyscrapers in China. Everything looks nice and new, but there is no life there. Haeber and his engineers claim that, "The nicest place when you are working in China is the hotel bar. It's air-conditioned, and if you get depressed, you can always look at your return airline ticket, which will take you back home to Europe to cheer you up."

These days, the German engineers traveling back and forth to China often refuse to fly on Chinese airlines. They insist upon Lufthansa. They make lists of positives and negatives when offered loads of money, free international schools for their children if they relocate for a few years to China. Most of them say "No."

"When they come to purchase machines and software in Germany, we are focused on making sure it works well. They don't care. They just want to know how you get from our town in Germany to Switzerland to buy a Rolex, and they also heard the chocolate there is good."

"All of this high-tech work we are doing, this Western lifestyle which we have protected for generations about how to work, how to socialize and be together is missing in China."