It is in the nature of things that large corporations prefer to be represented all over the world. The more markets, the more orders, the more sales, and ideally: the more profit. This also applies to the Munich-based Siemens group, which has been primarily a digital group since the spin-off of its energy division and medical technology business. However, there are a few questions, for example these: Where can a company that almost tripled its profit in the past quarter and earned 3.55 billion euros and is sitting on major orders worth 105 billion euros actually go with its money?
Where to invest in these times? When Russia invades Ukraine, managers have to talk more about geopolitical risks than in all previous decades, when the globalized world in which people had settled comfortably for years falls apart into new blocs, when the conflict between China and the USA continues to escalate and an attack by China on Taiwan must at least be expected?
Answers to these questions were given by Siemens CEO Roland Busch early Thursday morning. Location: A company auditorium in Singapore, the CEO in a light shirt and dark jacket. A few journalists in front of him, behind him a dark wall with the inscription: Siemens. It is a quarter-hour lecture packed with terms that are often heard these days, from many managers. Words like “resilience”, “diversification” and “sustainability”. Basically, it’s about: Where can you invest without great risk in such a way that it is profitable in the end?
The boss raves about growth markets
Siemens plans to invest two billion euros in expanding its production, including 200 million euros in a new factory automation plant in Singapore. Investments are also to be made in the USA and Europe in the near future, but not only there. Another 140 million euros are to be invested in a factory in Chengdu, China, including a new research and development center, and demand from China is high. It’s about 400 new jobs. Busch speaks of “extraordinary opportunities” and that his company wants to improve “the lives of billions of people”. “China is a growth market,” says the Siemens boss, which of course he is not wrong about.
The aim: to distribute risks as well as possible
But China is also a market that is being talked about a lot at the moment. And not necessarily because of the expected market growth and investment prospects for European companies offering factory digitization. But because nobody knows how China’s relations with the West will develop in the coming months and years. Busch admits that for a long time they were “too dependent on certain countries”. Therefore, investments are now being made everywhere. However, this has less to do with “geopolitical tensions”. Which brings us to the real issue: how to continue investing in China without investing too much? How do you get out of a dependency as a company without communicating this too openly to a quite lucrative country like China? A tightrope act. However, what is the 140 million euros from Chengdu compared to the 10 billion euros that the chemical company BASF is investing in China?
Chancellor Olaf Scholz (SPD) said recently that he would like a balanced China strategy in the economy. No “decoupling” by China, but “risk minimization,” he said on Wednesday at the presentation of the federal government’s first national security strategy for Germany. Of course, decoupling is not easy when you earn billions in China like the German car manufacturers. The risks are more difficult. How big they really are only becomes apparent when there are problems.