German industrial conglomerate Siemens has announced significant investments in factories in China and Singapore as it pursues a strategy of diversification in Asia and expansion in the Chinese market despite rising geopolitical tensions.
CEO Roland Busch told a press conference in Singapore on Thursday that Siemens would invest 2 billion euros worldwide this year to increase its production capacity, starting with a factory expansion in China and the opening of a high-tech factory in the city-state.
China’s doubling comes after Busch described it as a driver of technological innovation, but Siemens is also shielding itself from over-reliance on a country where US restrictions have made it difficult to operate — by choosing Singapore as its export hub. to the South and Southeast Asia.
“I avoid the word decoupling because decoupling means deciding either/or and no one wants to do that. . . the difference is diversification, which is looking at how you can serve more markets. . . making you more resilient at the same time,” Busch told reporters on Thursday.
Siemens’ new 200 million euro factory in Singapore, which will employ 400 people, will produce digital twin and “intelligent hardware” technologies for companies in the region.
The conglomerate will also invest 140 million euros in the 40 percent expansion of a factory in Chengdu, in southwest China, that makes software to control robots and other industrial machines. However, this would “continue to serve China’s local growth opportunities for China.” It comes alongside a new research and development center in Shenzhen that will “accelerate the development of motion control systems”.
Siemens said the high-tech investments in China were made because customers in the region were “early adopters of new technologies, especially in digitalization and high-tech manufacturing,” echoing comments Busch made in the Financial Times last month.
“Where can I find the customers who are pushing me to the next level of innovation, who are demanding and who are looking for the next technology?” he said at the time. “It’s China in a lot of cases.”
But Siemens’ China strategy has been questioned by investors, who are growing wary of any dependence on the country amid calls from Berlin for German industry to diversify.
In unveiling its first-ever national security strategy yesterday, the German government noted that its largest trading partner, China, has become a growing threat to international security in recent years.
The German publication WirtschaftsWoche reported that Busch had originally wanted the Singapore plant to be located in China, but relented after protests from members of his supervisory board.
Busch described the increasingly volatile relationship between the US and China on Thursday, saying that “we have this race over who’s number one in the world — and this is causing some tension.”
However, Siemens’ diversification strategy was mainly driven by the pandemic as companies realized “a very, very heavy dependence on certain supplies from certain countries, or even individual companies”.
“The whole world is now working to reduce those dependencies,” Busch said.
