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German companies in China

The challenges of the market - even during the Corona crisis

FUCHS PETROLUB SE is a global group headquartered in Mannheim/Germany which develops, manufactures and sells lubricants and related specialties in more than 50 countries. With nearly 6,000 employees worldwide FUCHS will reach this year a turnover of more than €2.7 billion. In Suzhou (Jiangsu Province) and Yingkou (Liaoning Province), FUCHS operates two of the most modern production facilities of the industry. The central functions and the R&D Technical Center are located in Shanghai.

Bernd Siegel, CFO of FUCHS Lubricants (China)

Mr. Siegel, how did FUCHS China deal with the corona crisis?

The outbreak of the covid pandemic was an enormous challenge for FUCHS China and its management. In an extremely short time, we had to take measures to comprehensively protect our employees, our customers and suppliers.  

Looking back, we can say that we mastered this task brilliantly. The spirit of our employees was impressive. Together we have shown that we can overcome this crisis. To date, we had not a single Covid case at our sites.

At all times we were able to deliver our products to industries that depend on just-in-time deliveries. This was possible because we established interdepartmental task forces that implemented frequently changing requirements 24/7. We also were successful in procuring sufficient masks and disinfectants. During the first few weeks, we worked largely from home and handled access to the sites restrictively. These conditions also proved that our IT infrastructure is extremely resilient. Ultimately, the key to success was the commitment of our employees and their strong cohesion.  

Many German companies continue to rely on China. Do you have a rule of thumb for success in China?

I think China is too big and too diverse for one rule of thumb; such a rules depends, among other things, also on the industry. It also important whether an investor wants to serve the local market or wants to export his products.   Nevertheless, we can see certain common patterns behind the success stories. From my point of view, the motto especially applicable for investment in China is: All or nothing! By this I mean that the size of the market and its diverse requirements demand from the top management a high degree of dedication. Production and value creation must be local - not only because of the latest legal requirements, but above all in order to be close to the market and customers. This also applies to R&D. This is the only way to fully understand and meet customer requirements.  Furthermore, China is the perfect place for scaling. Think big, act big, grow big. China requires speed!  Decisions have to be made and implemented promptly. More than in Europe or the US, China also offers an environment for trial and error, rather than lengthy creation of a perfect plan. China's dynamics keeps overtaking all the time our plans.

In which industries Chinese companies outclass technically already German ones?

Mostly these are industries that particularly benefit from scaling, or industries that enjoy strong government support.  That means: railways, power generation and distribution with all related equipment. Furthermore, New Energy Vehicles - here Chinese companies are very efficient and also pose a technological challenge. Finally, the digital and IT sector with the country's well-known tech giants and their diverse services and apps. I also include the area of eCommerce, including all the supply chain solutions.

What characterizes a successful CFO in China?

A CFO who wants to be successful in China must first and foremost be entrepreneurial. As a partner to the business teams in sales, R&D and production, he must understand the dynamics of the market and translate them into viable business plans.  This requires a deep understanding of the country, its cultures and its people. He must also want to keep up the pace.  Besides financial data and IT systems, soft factors play a special role here. The good CFO is an all-rounder with knowledge of the details. As a rule, the CFO has also to provide the company and its investors with the necessary security in terms of compliance and corporate governance.

You and many other expats were unable to travel to their home country during the pandemic period. What shaped you during this time?

The experience of cohesion was formative. Cohesion among the employees here at FUCHS China as well as in the communities where we are active. We closed ranks and helped each other out. Initially with simple things like masks and disinfectants, the use of which, by the way, no one here was questioning. Later, the social exchange became more and more important, which I was able to experience with both Chinese and foreigners living here. In the end, even new friendships were formed. My personal conclusion is: The pandemic also made me again to look more inside and sharpened my sense of what really counts in life.

Dec 22, 2021