Big Deals

Fear of Being Sidelined

China-Reise Merkel
Few Germans, many Asians could be the future.
  • Why it matters

    Why it matters

    German companies face an uphill battle against competitors from the Far East in emerging markets. The Asian firms often benefit from ultra-low-interest government loans, and the mixing of politics and business promotion, frowned upon in the West, is common in Asian cultures. Experts want lawmakers to change the rules of the game to eliminate Germany’s handicap.

  • Facts

    Facts

    • In 2013, German industrial companies in the plant construction business earned only €21 billion on major projects worth more than €50 million.
    • Despite its membership in the World Trade Organization (WTO), Beijing blatantly supports its own export industry with cheap loans.
    • German government export-credit guarantees, known as Hermes, are designed to protect exporters against default by their foreign customers.
  • Audio

    Audio

  • Pdf

At first glance, business appears to be booming for ThyssenKrupp, a tradition-steeped steel manufacturing and plant engineering company based in the industrial Ruhr region.

Last month, the company won a contract to build a €100-million ($125-million) cement plant in Saudi Arabia after landing a large plant construction deal in Algeria. And chemical plant builder Uhde, which merged with the ThyssenKrupp Resource Technologies to form the new Industrial Solutions division in January, has meanwhile become a major player in the United States. Americans have been ordering chemical plants ever since they began producing low-cost shale gas and oil on domestic soil with the controversial extraction method known as fracking.

But these impressive contracts are little more than a snapshot. German plant construction firms are increasingly being sidelined in a growing number of major, high-ticket projects around the globe.

Since 2013, ThyssenKrupp, for example, has lost four bids for fertilizer plants in Eastern Europe and Central Asia to competitors from Asia, and the company is rarely a player in projects outside the West.

Other German plant builders are losing out, too. Despite its good connections in Russia, the SMS Group lost a bidding war for a rolling mill in the Ural Mountains region, and the electronics and engineering conglomerate Siemens has faced major challenges in its efforts to compete in the Vietnamese power plant market.

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