Germany and China: Doing good business together

Cooperation, mega-deals or complete takeovers – German robotics companies are joining forces with their Chinese counterparts in many ways. These moves attract both criticism and commercial reward. Some start-ups are taking a different path.

By Jan Kaulfuhs-Berger

Kuka, a leading global supplier of automation solutions and industrial robots, has been active in the Chinese market for over 25 years. The story started when the Augsburg-based company, which celebrated its 125th anniversary in 2023, received a major order from Audi AG to supply robots to its plant in Changchun. It meant Kuka could lay claim to being “one of the first global companies to export robots to China.” That was all the way back in 1998. In the subsequent years, the Augsburg-based company opened several branches and production facilities of its own in China, all to little public attention. Then, in 2016, a major outcry, when Kuka was taken over by the Chinese company Midea, a business primarily known for its air conditioners, microwaves and rice cookers. The move was seen in Germany as a major fall from grace. The media complained of a “sell-out of the German economy” and a transfer of know-how “from Augsburg to China.”

For Kuka, the deal has not been bad for business. In fact, the company recorded an 8.1% increase in employee numbers shortly after the takeover, and turnover has now risen from 3.5 billion euros (2017) to 4.1 billion euros (2023). So was selling to Midea the right decision, despite all the criticism? Prof. Johannes Fottner, who holds the Chair of Materials Handling, Material Flow, Logistics at the Technical University of Munich and travels extensively in China, takes a pragmatic view: “No German investors submitted a suitable bid anyway.” Of course it is important to distinguish between a complete takeover and a collaboration, he says, and the latter is usually more acceptable to the public. But even a takeover is not a bad thing per se. “There are good and bad investors in China, just like in the USA.”

„Made in Germany“ als „Gütesiegel für Qualität und Exzellenz“: Neura Robotics will mit seiner Produktion wieder komplett nach Deutschland umziehen und von hier aus den Weltmarkt erobern.

| Neura Robotics GmbH

The robotics company Franka Emika was also reliant on outside help when it underwent preliminary insolvency proceedings in the last quarter of 2023. Three companies were interested in the Munich-based startup: the investment firm Schoeller, the robot manufacturer Neura and Agile Robots. The contract was awarded to Agile Robots, a Chinese-run company based in Munich. This prompted the Schoeller brothers, who were also interested in a takeover, to appeal for an intervention by the German government. Given Agile’s Chinese ownership, they considered that “a de facto sale of this unique high technology to the People’s Republic of China” was likely. Their concerns did not prevent the deal.

Franka Emika, now operating under the name Franka Robotics, currently offers its products and solutions via a global dealer network in many European countries as well as in the Middle East, the USA, Canada, Thailand, Taiwan and South Korea. For all the criticism about the loss of cutting-edge technology to China, the fact remains that Franka Emika has been saved from certain insolvency and is doing business internationally.

When German robotics start-ups are rescued by Chinese companies, there is almost always the fear that they have prematurely given away cutting-edge technology.

The Circus Group is another example of how companies can do good business with China. The kitchen robotics startup from Hamburg uses artificial intelligence and robotics to build autonomous robotic systems that can prepare fresh dishes in large quantities and to a high standard. It has signed a multi-stage exclusive agreement with the Beijing University Food Raw Material Joint Procurement Center in China. The partnership aims to integrate Circus robot technology over several growth phases into a total of 92 educational institutions in Beijing with a total volume of 5,400 robots. The potential sales over the next few years are estimated in the billions of euros. For Fottner, this is a “prime example of successful cooperation.”

Portrait photo of Prof. Johannes Fottner

Prof. Johannes Fottner, Chair of Materials Handling, Material Flow, Logistics, TU Munich, emphasizes that the opportunities of entrepreneurial partnerships must remain in the foreground.

| TUM / A. Eckert

Others, however, are going in the opposite direction. Neura Robotics, which was among those interested in acquiring Franka Emika in 2023, announced the following year that it would relocate its entire production from China to Germany. The cognitive robotics business, headquartered in Metzingen, believes it has set a decisive milestone. It wants to become the “next German hero.” David Reger, Neura’s founder, explains: “We are convinced that international innovation leadership and regional ties are not mutually exclusive.” In his opinion, “Made in Germany” is still a seal of quality and excellence, “especially in areas where top hardware is in demand.”

Neura Robotics says it has “conquered the global market in just three years” by developing the first market-ready cognitive cobot. It claims to be “the global pioneer and innovation leader in the industry.” Cognitive robots go beyond sight, hearing and touch by being able to fully perceive the environment and people around them and to act autonomously. Neura has confidence in Germany as a business location, as demonstrated by its plans to reshore production from China. According to Reger, the company is counting on “politicians to take action soon.” And Dr. Bernd Heinrichs, the Chief Growth Officer (CGO), is convinced that strong domestic locations are the “next logical step in our expansion strategy.”

“Despite the current economic weakness, China will remain an extremely important market for German and European companies,” says Fottner. However, the enormous progress of Chinese companies in terms of technology and quality should not be forgotten. He believes this should be seen “not just as a risk, but rather as an opportunity for entrepreneurial partnerships. As in any partnership, the risks should be highlighted, but the attractive opportunities must remain in the foreground.”