00:00:00: impulses and perspectives the dikt expert talk hosted by Nikolai behr

00:00:09: hello and welcome to impulses and perspectives today we're talking with William Shen

00:00:14: who is mergers and acquisition Directorate core industries in Munich

00:00:19: he's a native Chinese and he has a long experience as a purchasing manager for

00:00:25: the automotive industries hello William hello I can i well you're doing a lot in

00:00:31: the German Chinese merger scene now is Korona everything changed how is this

00:00:40: situation right now

00:00:43: well in our business in M&A suddenly everything is really slowed down and you

00:00:49: know in a business you have to find proper target introduce your target to

00:00:55: investors and then you need to bring them to make together you have to do due

00:01:00: diligence they the managers need to meet face to face and all this are not

00:01:05: possible at the time being because simply travelling is not possible so it

00:01:12: was it's totally less a stopped apart from

00:01:16: the travelling restrictions and there's also a lot of slowdown in the economic

00:01:22: so China is a couple of weeks ahead of us how is the situation right now in

00:01:29: China is economy almost back to normal well the production is back to normal I

00:01:38: would say most of productions the Chinese government was reporting from

00:01:43: time to time every month monthly they're recording how the major industries are

00:01:48: resuming to normal right you are having index saying okay now the major of big

00:01:55: or medium-sized companies they are 100% or 99% resumed normal production but

00:02:03: that's only one part of the story because even you'll have your workforce

00:02:09: now walk in the factory you have to produce anything you have to sell your

00:02:13: products and that's the tricky part because when China has somehow the virus

00:02:20: situation under control which is the same needs of March late March and then

00:02:28: the outbreak starts in Europe astonishing us which is most important

00:02:33: consumer markets for Chinese products China has roughly twenty to thirty

00:02:38: percent or even more this is relating in exports which is mostly exporting to

00:02:44: Europe and us and go to the pandemic and due to the short arm of business

00:02:50: the honors countries and on a part of the word the most misses even they

00:02:57: resume in production they are not receiving orders or they're seeing on

00:03:01: has been cancelled so on that perspective the capacity in normal

00:03:06: production is full but there is nothing nothing can be produced or nothing is

00:03:11: produced most set from from health may be like masks or something like that

00:03:18: Oh mask mask is completely interesting and totally different topic we can talk

00:03:26: about separately about the mask is is the only business which is running but

00:03:31: if you look at anything else we're hearing that most of exporters big

00:03:38: companies in the say in different industries in daily retailing business

00:03:43: is consumables in plastic house where special automotive all the spaces they

00:03:51: are reporting less less sales or customer miss cancelling of their orders

00:03:58: so in the diversity versus saying said in February all this companies in China

00:04:06: have problem because of orders they have they cannot produce because it's not

00:04:09: allowed they shut down and then in March they are all able to produce but the

00:04:15: customers a shelter so basically for them Tiberium us make no big difference

00:04:21: and the way products are made is there any difference to before the corona

00:04:31: crisis when factories we open now yes there are tremendous regulations there

00:04:40: has regulations saying that you don't put too many people in one certain

00:04:46: closed space right and the regulations ask you to wear masks for example in

00:04:52: production people has to do temperature check and they have to have showed their

00:04:57: digital codes on their cell phone to show what's their personal risk level

00:05:03: here and there and all this make the whole hoses much more complicated so

00:05:10: basically you are not having as many as workforce as you can have in the past a

00:05:17: lot of companies they now say ok I'm only having 50% or 75% of my workforce

00:05:25: and they are using more different shifts for example all office labors

00:05:30: I learned from my friend BMW at least two weeks ago in their office in Beijing

00:05:36: they are running to shift so everybody works three days a week and the rest of

00:05:41: the time has to stay home so nobody is just somewhere in one office you have 50

00:05:46: employees and this only allowed 25 can go to the office the rest has to stay at

00:05:52: home so half of them come on Monday West and Friday and the other half on

00:05:57: Tuesdays so Saturday so therefore a lot of people have to

00:06:03: work in the home office so in Germany I think the coronavirus have brought a

00:06:08: big shift in digitalization also for the students who have to do homeschooling so

00:06:17: China is already very much ahead of Europe in the digitalization is the

00:06:25: workforce also shifting more towards digitalization through this crisis it

00:06:33: depends for some industries especially in service sector white-collar work jobs

00:06:39: in office they are more and more shifting into digitalization you can do

00:06:45: telephone conference for home you can do everything on your laptop so you can do

00:06:50: it but most of the business in China Louis medium or low level manufacturing

00:06:56: ninety percent of the workforce they work in factories they work in

00:07:01: production lines so certainly you cannot do this right from home there you have

00:07:07: to go to go to go to production plants the good news is or bad news is why

00:07:13: you're receiving less or so you don't have to produce admit that

00:07:18: many so basically you can play off some of the workforce or give them only

00:07:24: halftime job so at the end you can still maintain the pop operation with only 50%

00:07:29: people sitting in one production so in general how do you see the German

00:07:38: Chinese business relations and is there a change due to the corona crisis I

00:07:46: think the word is totally different compared to three months ago

00:07:51: I was four five six months ago is suddenly we're not going back the

00:07:57: business model we have now with the trading with the people how see how

00:08:03: people cease the suppression was arranged in the past especially a lot of

00:08:08: German company produced in four is in China in Southeast Asia or countries and

00:08:13: then export to us OS but back to Europe this business model I think people who

00:08:18: have to be thing now they have suppliers far away components out of bridge

00:08:27: because of one the two major components that you you cannot get maybe from this

00:08:32: and that country and your entire supply chain will shut down and you don't use

00:08:38: anything I think this people will certainly we

00:08:41: think about how this will happen how this will go

00:08:45: if you look especially into the PE parts private personal protective equipment

00:08:52: the government even in USA in European Union they realize that put all this

00:08:59: low-cost labor work into Far East maybe it's not a good idea now in urgent needs

00:09:08: you what can you do where you have to fight for is you have to compromise

00:09:12: quality of a crisis aerosol so I think maybe we have been too fond predation

00:09:20: and there is something you have to to be reconsidered

00:09:24: in that sense I think after the crisis if there will be an end in next six

00:09:30: months and a lot of company might have to resync how they are organizing their

00:09:36: traditional approaches and also they probably want to produce more clothes to

00:09:44: their customers instead of you know producing so analysis and this will be

00:09:50: also I think regulators are putting more regulations more rules to help them or

00:09:56: no incentives to help in fact just move back to Europe or to yes so but if you

00:10:02: have a closer look on how Chinese business people see Germans and German

00:10:08: work together with China do you agree that this relations are much better than

00:10:14: the relation for example with the US or UK I have to say China u.s. is if

00:10:22: there's not a nightmare it's also slightly better than I admit it's really

00:10:27: disaster my sink is partially due to the u.s. presidential election situation

00:10:36: there and you know now the economy is so bad

00:10:41: people are dying endemics everywhere this is really bad for for the Fourier

00:10:48: transform mr. Trump and people are plebs or most people believes even recent news

00:10:55: you can find out that the common precedential they need to find somebody

00:11:01: you know to shift their focus from the bad economy domestic from the pandemic

00:11:08: issue domestic and shift the focus to somewhere else and this is creating

00:11:12: tension this is also the view that Chinese people read from social media

00:11:20: the red very negative opinions especially from US News and US social

00:11:28: media and the speech from some hominin US leadership and they feel that they

00:11:35: are see they're fairly high the us or

00:11:38: sometimes even filled by the westward and this created a lot of tension also

00:11:44: in China giving a lot of pressure right to the top leadership in China they have

00:11:49: to respond if they are responding in that more soft time in a more or less a

00:11:55: medium weight and they would have a lot leisure at home people return you're too

00:12:01: soft you have to be more nationalized more aggressive the audience they become

00:12:09: really look bad but I think if you take Germany particularly out I think at

00:12:17: least in China the contact I have and especially business people they still

00:12:22: consider China German relationship is one of the best compared to all the

00:12:29: other in Western nations but I think the u.s. is really go into the next upcoming

00:12:39: month which field of business you think will recover first I think certainly the

00:12:48: component business there is a supply chain right

00:12:53: there's an international supply chain or some complicated machinery and

00:12:57: components and so China or Germany are just especially China they are

00:13:03: delivering only part of the whole assembly of a product and when this will

00:13:11: come back and the customers or manufactures in Germany and Europe they

00:13:18: have their backlog orders they have to fulfill for global customers and they

00:13:23: will urgently need shipment of earths of their sub components I believe this

00:13:31: business shoe assumed very first because I think they already urged for four

00:13:37: parts and also there are a lot of parts it is supposed to be produced in Germany

00:13:44: ship designer and this part are now due to the shotgun

00:13:48: in Germany varus in also a great need I for example motivated factual

00:13:55: machinist I have a friend in China in purchasing department at least by early

00:14:02: April when I was talking to them they told me they have a lot of supplier

00:14:07: produced in Germany I think medidas produced in China there was more than

00:14:12: 50% component steel sauce from Europe and they said for wasted components they

00:14:18: shot from Europe they have a stock that can keep them producing until end of May

00:14:25: so by an expense they have to stop production if there's no more bascomb

00:14:31: yep so I think if pieces started here they the supplier has to fly us so that

00:14:39: would be good news for the German and the Chinese companies of the car

00:14:45: manufacturers and the car production will start very early and also be sales

00:14:52: having a look to the people I have Impressionists the Chinese people are

00:14:57: very disciplined so if they got orders from the state to stay home they stay

00:15:02: home they did so in Germany as well but now you've seen the last week's or last

00:15:08: days that they starting to demonstrate for more freedom and for open up faster

00:15:14: what do Chinese people think about these movements in the West to stop this

00:15:25: Corona measurements something we didn't really understand especially in late

00:15:32: March and April was the most of the scientists and politicians in the West

00:15:39: but always telling people you don't need to wear a mask well if you record back

00:15:47: to March in April everybody was saying yeah mask is only for patients they

00:15:52: don't wear masks this would not protect you and would not protect anybody else

00:15:55: this in the sense of a lot Chinese people I think come on this is

00:16:00: unbelievable we are having raspberry respiration

00:16:06: little disease everything comes through your mouth and nose or coming out of the

00:16:11: mouth and simply you have to cover your mouth and nose trying not to get

00:16:15: infected or not impact anybody else why would anybody telling the population

00:16:20: here that's it this is not necessary I would would not be helpful

00:16:25: this is they feel very very strange but you see now the popular politicians or

00:16:33: policies are implemented everybody has to wear a mask this now makes sense I

00:16:38: think this is the only thing they don't really understand but the rest I think

00:16:43: they understand they think also people in Europe very discipline in Germany I

00:16:48: think Germany especially Germany was our performance here in this pandemic is one

00:16:56: of the best in the world it was praised by erring social or

00:17:02: public media in China as a good example people believe that Germany really doing

00:17:10: great doing doing the best job probably isn't better than us because there are

00:17:16: still a lot of freedom less limits still we successfully come to this point if

00:17:26: German business people want to establish contacts to China what is the best way

00:17:32: you would recommend well I think there is not a lesson I can tell I can make to

00:17:41: any German businessman because I think a lot of most of the German companies even

00:17:45: small companies they already have their footprint in China

00:17:49: I saw the myths I have rarely meet anybody who has no experience in China

00:17:55: at all so I rather say most German companies acquired international

00:18:01: especially they have special knowledge and experience in China there are a lot

00:18:08: of German associations Business Association showing a support

00:18:12: courting so any German business will want to step into Chinese market and if

00:18:18: you look into service industry in Germany for some law firms accounting

00:18:22: firms consultancies they basically spread out in all around China mister

00:18:29: employees and their even as best to support any German business oh I don't

00:18:34: think anybody would need new advice from me how to do business there and they

00:18:41: certainly can have directly there are normal contact to establish a good this

00:18:49: is in China but only thing I could imagine that somebody should think of

00:18:55: especially if you want your you're aiming Estelle's

00:18:58: in China then probably you need to more work together with local sales

00:19:06: professionals maybe you want to incorporate more local management

00:19:12: employees more in the south south side so then because I mean business

00:19:20: relationship is a bit different in China than in Germany if you want to deal with

00:19:26: state-owned Chinese company which are one of the biggest customer in the world

00:19:31: if you want to do their business I think if we want to only use a German face and

00:19:41: German approach this may not work this may not work but the rest I think all

00:19:49: fine especially if you want to deal with seitan Chinese government this I think

00:19:55: you have to have hire more local people ok so last question William how long you

00:20:05: think we'll this states quote we have right now with Corona and going down but

00:20:13: the economists still slow go on so when will we be back to normal

00:20:18: hopefully this is a question for any scientist so I really cannot tell you

00:20:25: reading and following all the news and reports from everywhere in everybody is

00:20:30: telling you something different but I can tell you what why the scientists and

00:20:35: experts in child how they seize this they believe this is another tough bus

00:20:40: to go and this we cannot release until we have vaccination and you don't see

00:20:48: any vaccinations coming out in the next six to eight months in any country so we

00:20:55: were saying we have to leave a bit different life for at least another six

00:21:02: to twelve months yes I think but at the end the

00:21:06: scientists have to tell you okay thank you very much William stay safe and you

00:21:13: know all the best for the German Chinese business relations and thanks a lot for

00:21:18: your insights Thank You Nikolai if you would like to watch all of our new

00:21:25: episodes please subscribe to our YouTube channel