Some remarks that VDMA President Reinhold Festge made at a recent press conference in Tokyo turned into sensational headlines in China.
VDMA (Verband Deutscher Maschinen- und Anlagenbau e.V.) is a German engineering association, which represents plastics and rubber machinery manufacturers, among others.
According to Japan's Nikkei Technology, Festge told the audience in Tokyo that Japanese and German machinery manufacturers need to work together to fight their common competitor: China.
China aims to shift focus from increasing production volume to improving quality, the Nikkei report quoted Festge saying. In order to achieve that, he said, China will reduce its dependency on foreign technology in the midterm.
China also aims to strengthen its competitiveness in export markets, he added. He believes China will first target nearby markets in India and ASEAN countries, and in its next step will be to expand into the United States, Russia and Turkey, and eventually aim for developed markets in Europe, according to the Nikkei report.
Festge went on to state that Japanese and German machinery makers should explore how to cooperate in third-party markets, the report said. “Especially in complementary product categories, the two countries should join forces to face challenges brought by China — this would be an effective strategy.”
In response to Plastics News' inquiry, VDMA chose not to comment on the details of the media coverage, including how the speech was interpreted and presented. Instead, the association shared the following transcript of Festge's speech:
“In the export markets, we will pay much more attention to Chinese competition, too. Last year, the VDMA commissioned several studies that looked into the competitiveness and the strategies of local Chinese companies.
“The objective seems to be clear: Firstly, Chinese manufacturers want to conquer markets that are in close proximity, such as India or the ASEAN states. Secondly, the scope will then be extended to countries such as the USA, Russia and Turkey. The long-term objective remains, among other things, the highly developed European market. So the German and the Japanese engineering industry will have to work considerably hard themselves in order to respond appropriately to this Chinese challenge.”
A Chinese industry observer wondered how much common ground Japanese and German machinery makers can find, citing the trade imbalance between the two countries.
Numbers compiled by VDMA show that in 2013, Japanese machinery exports to Germany reached 400 billion yen ($3.9 billion), while German machinery exports to Japan were 285 billion yen ($2.78 billion).
VDMA also said foreign (non-German) companies have taken more than half of Germany's domestic machinery market, while no more than 13 percent of the machinery sold in Japan is made by a non-Japanese company.