The shortage of chips as a result of the corona pandemic highlighted the dependence of German industry on China.
Some companies are now buying components in Europe.
The corona pandemic showed many companies that they are dependent on Chinese parts imports.
Shopping in Europe is possible - but significantly more expensive.
Do consumers bear this in mind?
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China.Table
first published it
on November 10, 2021.
Berlin - Jochen Kopitzke, managing director of a medical technology company, did not necessarily have the auto industry as a direct competitor for electronic components on the bill until a few months ago.
The same components for refrigerators and SUVs sound unusual at first.
But modern technology is based on the same tiny source in both industries: the microchip.
And because the annoying subject of corona makes it much more difficult to supply the chips, Daimler, BMW or Porsche are now getting in each other's way with Philipp Kirsch GmbH.
It is an unequal battle when a medium-sized company from Willstätt in Baden-Württemberg competes against the world's car manufacturing elite.
Philipp Kirsch is one of the "hidden champions" of German medium-sized companies.
But “the auto industry has enormous purchasing power that we as medium-sized companies can only dream of.
Still, we're fighting with her for the processors, ”says Kopitzke.
As a result of the corona pandemic, there was a global shortage of raw materials and semiconductors * that affect a wide variety of industries. Semiconductors are currently mainly produced in Taiwan; China's chip industry has been cut off from major suppliers in North America due to the trade war with the United States. In China itself, the shortage of raw materials also led to an acute electricity crisis *, as a result of which the production of other raw materials such as magnesium or aluminum * was cut back. All of this put companies around the world in crisis mode.
For Philipp Kirsch, nothing less is at stake than maintaining his own production.
The calculation is simple: no fridges without chips.
The processors now cost the company 25 times what they cost before the outbreak of the corona pandemic *.
And yet, Managing Director Kopitzke says: “We are happy that we have found ways with German suppliers to continue production.
Even if it hurts us a lot. "
Supply chains: "China has learned to control developments"
When Kopitzke speaks of "us", he is primarily referring to his own company, and yet he also speaks of "us" as a society. Ultimately, price increases in the supply chains also affect consumers. Because they inevitably have to contribute their share of the price increases. Not only when it comes to laboratory refrigerators, but also in large parts of the industrial value chain.
In the past year and a half, Germany and the European Union * had to realize that some mass components of industrial components are only manufactured in Asia. Kopitzke fears that the Chinese government in particular has gained valuable experience, that it has more leverage at critical points in value creation. “China has learned how to control certain developments by regulating exports in order to hoard certain goods for itself out of caution, or in order to want to urge other countries to make certain decisions,” he says.
The possible political consequences of this constellation cause the head of Philipp Kirsch GmbH to be uneasy. A few years ago, the company decided that it would therefore only buy important components for refrigeration and electrical engineering in Germany or other parts of the European Union. Kopitzke even convinced one of his central suppliers to call off his plans to outsource his production to China. That was even before the corona pandemic.
“At that time we made it very clear that we would not go along with it.
Two years ago we were concerned that Made in Germany should only appear on a product if, in addition to technological standards, the production actually also meets German environmental and social standards, ”says Kopitzke.
In the meantime, it has been recognized that too much dependence on the People's Republic of China can cause immense damage to Germany.
China and Europe: Global healthcare needs free movement of goods
This aha effect affected large parts of the entire German economy. It's not just about preparing for the next pandemic, but also about being prepared for a possible escalation of geopolitical tensions. Europe cannot afford to be blackmailed in order to remain able to act in a crisis. When it comes down to it, Germany must be able to provide itself with essential products.
This is also known at the medical technology company B. Braun from Melsungen in North Hesse, which produces and sells everything that is needed in the fight against a deadly virus. The company's portfolio includes 5,000 products. Therefore, not every single one is equally relevant to the system. But syringes, cannulas, disinfectants, personal protective equipment or infusion pumps are, in contrast, in times of a pandemic.
But the production of infusion pumps could not cope with the great demand in the past 20 months because the necessary small electronic parts are manufactured outside the European Union. When the borders were tight, the chips stayed out too. “The pandemic has made it clear that there is a need for free movement of goods when it comes to global health care. On the other hand, critical products also have to be produced in Europe, which B. Braun has always done, "says company spokeswoman Christine Bossak.
Systemically relevant, but not immune to setbacks in the crisis: The example of B. Braun shows how unexpectedly the pandemic hit German industry and relentlessly exposed its weaknesses.
The dependence on third markets was particularly evident in medical technology.
This lesson was not only drawn from within the industry, but also provided a basis for discussion throughout society.
Supply chains: After the pandemic, transport costs fall
As chairman of the Industry Committee Upper Rhine South in the Chamber of Industry and Commerce, Jochen Kopitzke from Philipp Kirsch sees how the problem penetrates deeply into the value chain and continues there. Even craftsmen would now “jump from construction site to construction site” and see that they finish their work there piece by piece. Depending on which materials and components are currently available, they would decide which order to continue next.
So the solution would be very simple: The production of indispensable components, regardless of the industry, must return to Europe. And indeed, in the course of his work at the Chamber of Commerce and Industry, Kopitzke found that this development was taking place. But then there still remains this obstacle with the price increase for numerous goods. Only when consumers are actually willing to dig a little deeper into their pockets does it make economic sense for companies to forego corresponding supplies from China *.
At the moment, consumers are playing along, says Kopitzke.
However, also because the transport costs * in the global supply chain network have increased tenfold.
That makes the products from Asia significantly more expensive and therefore affordable to purchase within Europe.
But the corona virus won't rage forever.
When the pandemic is over, transport costs will drop massively.
Only then will it become clear what Germany's consumers and industrial companies have really learned from the past two years.
By Marcel Grzanna
Marcel Grzanna
works as a freelance journalist in Cologne and has been an author for China.Table since January 2021.
Before that, he reported from China for the Süddeutsche Zeitung and other media for nine years.
Grzanna's book “A society in bondage” gives an insight into the work of foreign journalists in the world's largest surveillance state.
China is also the subject of his podcast “Poking with Chopsticks” (Spotify / Anchor).
This article appeared on
November 10th
in the China.Table Professional Briefing newsletter - as part of a cooperation, it is now also available to readers of the IPPEN.MEDIA portals.
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