German companies in China: The challenges of the market - including the coronavirus crisis

FUCHS PETROLUB SE, represented in more than 50 countries worldwide, is a globally operating group that develops, manufactures and sells lubricants and related specialties. With almost 6,000 employees worldwide, the German group, headquartered in Mannheim, generates over 2.7 billion euros this year. FUCHS operates two of the most modern production facilities in the industry in Suzhou (Jiangsu Province) and Yingkou (Liaoning Province). The central functions and the R&D TechCenter are located in Shanghai.

Mr. Siegel, how has FUCHS China dealt with the coronavirus crisis?

The outbreak of the Covid pandemic was an enormous challenge for FUCHS China and the management. We had to take measures in a very short time to comprehensively protect our employees, customers and suppliers.

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

In industries that depend on just-in-time deliveries, we were able to deliver at all times. This was possible because we set up cross-departmental task forces that implemented the constantly changing requirements 24/7. We were able to procure sufficient masks and disinfectants. In the first few weeks, we largely worked from home offices and restricted access to the sites. This also showed that our IT infrastructure was very resilient. Ultimately, the commitment of the workforce and the strong team spirit were crucial to our success.

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

I think China is too big and diverse to have one rule of thumb; it depends on the sector, among other things. It also depends on whether an investor from China wants to serve the local market or export. Nevertheless, we can see certain patterns behind the success stories. In my view, the motto for an investment in China is all or nothing! What I mean by this is that the size of the market and its diverse requirements demand a high level of commitment from top management. Production and value creation must take place locally - 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 we can fully understand and meet customer requirements. Furthermore, China is the perfect place for scaling. Think big, act big, grow big. China requires speed! Decisions must be made and implemented promptly. More than in Europe or North America, China offers an environment of trial and error rather than the lengthy creation of the perfect plan. China's dynamism repeatedly overtakes the plans of all of us.

In which industries have Chinese companies already gained a technological edge over German companies?

These are, on the one hand, industries that benefit particularly from scaling and, on the other hand, industries that enjoy strong state support. So railways, power generation and distribution with all the associated equipment. Furthermore, new energy vehicles - Chinese companies are very efficient here 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 eCommerce sector, 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, they 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. They must also want to keep up with the pace. Soft factors play a special role here alongside financial data and IT systems. The good CFO is an all-rounder with knowledge of the details. The CFO also provides 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 home during the pandemic. How did this period shape you? 

The experience of cohesion was formative. Both among the employees here at FUCHS China and in the communities in which we operate. We came together and helped each other out. Initially with simple things like masks and disinfectants, the use of which nobody questioned here. Later on, social interaction became increasingly important, which I was able to experience with both the Chinese and the foreigners living here. In the end, I even made new friends. My personal conclusion is that the pandemic has also made me look inward again and sharpened my sense of what really matters in life.