China's Wen eyes German business at trade fair

German Chancellor Angela Merkel and China's Premier Wen Jiabao Chinese Prime Minister Wen Jiabao on Monday visited the world's biggest industrial fair, hosted by European powerhouse Germany where firms increasingly see China as a competitor rather than a customer.
A day after jointly opening the week-long gathering of 5,000 manufacturing and technology companies from 69 countries where China is this year's guest of honour, Wen and German Chancellor Angela Merkel toured a number of the gigantic exhibition halls.
"We will make every effort to intensify cooperation with German companies in this age of green technology," Wen told reporters as he was shown the stand of Phoenix Connect, a leading supplier of industrial connection and automation technology.
'Green intelligence' is the motto of this year's fair with the focus on environmentally sustainable technologies and innovations.
With 500 firms present, China accounts for 10 percent of exhibitors at this year's show, making it the largest single showcase of China's industrial technology ever outside the People's Republic.
Given China's rapid industrialisation in recent years, some of the biggest names in German industry -- companies such as Siemens, BASF, automakers Volkswagen, BMW and Daimler, as well as small- and medium-sized family-owned enterprises -- have long made it a priority to have a presence there.
"China is now our second most important market," said Phoenix Contact chief Frank Stuehrenberg.
Out of the company's workforce of more than 12,000, some 1,500 are employed in China.
Bilateral trade between Germany and China stood at 144 billion euros ($189 billion) last year and "we're working on making this even more," Merkel said at the opening ceremony late Sunday.
While the eurozone, which takes some 40 percent of German exports, is tightening its belt as it grapples with its sovereign debt crisis and attempts to fight off recession, emerging markets are increasingly important for German exporters.
And even though the Chinese economy has slowed to a degree, it remains one of the key engines of German export growth.
However, China, with its lower production costs, is becoming not just a market for German companies, but also a rival.
"Often, China is viewed merely from the point of view of a market for selling products but it is increasing in importance as a competitor, too," said the head of the VDMA machine tool makers' federation, Hannes Hesse.
"China is by far the biggest producer of machine goods today ... it is the fourth biggest exporter and the trend is upwards," Hesse said.
For Wen, Germany is the second stage on a mini-European tour that kicked off in Iceland on Friday and will also take him to Sweden and to Poland.
After their joint tour on Monday morning, Wen and Merkel travelled to the headquarters of auto giant Volkswagen in nearby Wolfsburg where the carmaker inked contracts for a new plant in Xinjiang, northwest China.
The site, to be built with VW's local Chinese partner SAIC, will represent a total investment of 170 million euros. It is scheduled to begin production in 2015 and will assemble up to 50,000 vehicles there each year.
On the occasion of Wen's visit, VW also announced it would extend its long-running partnership with Chinese automaker FAW for a further 25 years.
The partnership dates back to 1991 and the two companies have a joint venture with production plans in Changchun, Dalian and Chengdu.
China is VW's biggest market, ahead of Germany, and the manufacturer plans to invest 14 billion euros there between 2012 and 2016.
Outside the congress centre in Hanover on late Sunday, around 200 protestors staged a small demonstration, waving Tibetan flags and shouting slogans about China's human rights record.
No opportunity was made available for reporters to ask Wen any questions during his visit.