German know-how on tap in Qingdao

Center due to be completed by 2014 is likely to help city better position itself for investment

There is more to Qingdao than its superb maritime backdrop with its yachts and ships. The city in Shandong province that looks out on to the Yellow Sea is also renowned for its strong German influence, embodied in every glass of Tsingtao, the beer named after the city.

The Teutonic influence is about to get a lot deeper with the opening of a German business center in a Sino-German technological development zone where the emphasis is on green investment.

The German Center will be located in Sino-German Ecopark, now being built. The center, due to be completed by 2014, is likely to help the city better position itself as a window for German investment in China.

The center will offer German enterprises office space, consultancy services, conference facilities, a business center and a startup company "incubator", according to an agreement signed by the Qingdao government and the German Center Shanghai last month.

"Apart from attracting German investment, the center will also make a contribution to introduce more advanced technologies and management practices in various sectors, such as renewable energy, energy saving and environmental protection, to Qingdao," says Christian Sommer, chief executive officer and chairman of the German Center Shanghai, which will operate the Qingdao center.

Most importantly, the center, with a gross floor area of 66,300 square meters, will be a bridge between German enterprises and local communities, says the Qingdao Party chief, Li Qun. The Qingdao center will be the third of its kind after the German Center Shanghai, set up in 1994, and a similar body in Beijing, set up in 1999.

Shen Lei, vice-director of the management committee of Sino-German Ecopark, in Qingdao Economic Technological Development Zone, says the German Center will encourage more German companies to open offices in the park.

Sino-German Ecopark, founded in December and the first of its kind in China developed with a European country, covers 70 square kilometers. It is a 30-minute drive from downtown Qingdao and 10 kilometers from the free-trade zone.

Construction has already begun on high-end industrial projects covering smart energy, green building materials, green finance, high-end manufacturing and vocational education.

It is expected that the infrastructure will cost 8 billion yuan ($1.3 billion, 996 million euros) to 10 billion yuan.

With the important preparatory work already done on the park, the job has now begun on trying to lure investment and infrastructure construction. Sino-German Ecopark said it has been in negotiations with more than 20 companies, and 12 have signed agreements.

Thomas Gaeckle, deputy director-general of the German Federal Ministry of Economics and Technology, says Germany believes the park could become a model project for bilateral cooperation.

"Germany believes that the park should set challenging and internationally comparable energy and environmental standards, that German and Chinese firms should work together to achieve these, and that state-of-the-art technologies and processes from both countries should be deployed."

Li says the governing committee of the development zone will work with the German Center Shanghai to set up some ecological criteria for the park that will help develop low carbon-consumption industries.

Gaeckle says his ministry will help draw the attention of German companies to the project.

"The German government has promised the Chinese side that it will bring business delegations to Qingdao on a regular basis, so that they can find out first-hand about how the project is developing and about the possibilities for German firms to become involved."

The first delegation of more than 20 companies visited Qingdao this month.

The electronics and engineering company Siemens is one of the first participants. It has signed an agreement with ENN Energy Holdings, a company in Hebei province that produces and distributes clean energy, and which has operations in more than 100 cities worldwide and total assets of 40 billion yuan.

Each side will invest 2 billion yuan and fully cooperate in terms of clean and renewable energy in the park.

Lin Zebo, vice-president and provincial general manager of Siemens Shandong and Henan, says the venture is still at the planning stage.

"ENN has wide experience in gas distribution, and Siemens has strengths in green-building materials. Being in partnership with each other will largely promote the construction of (the park)."

Lin says he is confident about the Siemens investment and that the return will largely exceed the initial 2 billion yuan it has put in.

But there will inevitably be conflicts in the eco park, Shen says.

"The first challenge is the conflict of two cultures. Germans are more careful and concrete in the way they work, and will proceed only with the utmost caution. Chinese officials like to do things as fast as they possibly can."

A concern that many Germany investors have is whether the ecological standards agreed on in talks will remain consistent as the project proceeds.

"Siemens is willing to bring its global practice and experience into the eco park, but we are skeptical about whether the local government will be able to maintain the high standards," Lin says.

German companies' standards for the park are high, Shen says, and that will be reflected in higher rental and other costs, which will make it harder for companies to make a profit. Balancing the two issues will be problematic, he says.

To alleviate the concerns of foreign companies, the management committee will have a meeting every two weeks and appoint a designer to supervise the operation of the park, he says.

Gerkan, Marg and Partners, a German architectural studio, has been assigned to design the master plan. There is also the matter of selecting the companies for the park.

"We prefer asset-light companies, with fewer fixed assets and less energy consumption," Shen says. "Companies in green energy, environmental protection and mechanics, electronics and food and beverage are our first choice."

Yao Jian, vice-mayor of Qingdao, says the park will not only be a manufacturing center, but also a model project establishing industrial standards, so that there will be no barriers if Qingdao wants to export more products to Germany and Europe.

Contact the writers at linjingcd@chinadaily.com.cn and xiechuanjiao@chinadaily.com.cn

(China Daily 06/22/2012 page19)