How Internationalisation can Affect your Business

Globalisation How Internationalisation can Affect your Business

07.03.2017Author / Editor: Rosemarie Stahl / Dipl.-Medienwirt (FH) Matthias Back

Is globalisation a blessing or a curse? During the last year, everything pointed towards the latter. The influence of politics on the European economy has been particularly strong in 2016. The future impact on European tool and mould makers is uncertain.

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The world grows closer together. But that is no purely positive development.
(Source: Pixabay/CC0 Public Domain)

In the thirteenth century, Marco Polo needed years for his journey to China. Legend says that 500 kg of silk were confiscated before he could return back to Italy. Today, the world has grown together. In times of Twitter, Facebook and Youtube, the world has indeed become a village. And travelling to China takes a little bit under 10 hours.

It is not a surprise then that internationalisation has become a major topic in the industry as well. Companies that want to be successful in the long term need to extend their customer base to foreign countries, which often means opening facilities on different continents to fulfill customer requests quickly.

But it is not as simple as that: With European companies cleaving their way to Asia and America, Asian and American companies enter their respective domestic markets. Last year, the Chinese acquisition of German robotic specialist Kuka was followed by great public interest and, at the same time, anxiety.

Gallery

The graph shows how investments of Chinese companies in foreign takeovers, and thus in innovations, development and research is growing. In the years between 2010 and 2013 the transaction value doubled.

Dr. Heinz-Jürgen Prokop, Chairman of VDW: "We see the greater danger in Mexico. If import restrictions really are established for products from Mexico, this would affect us directly.“

Thilo Brodtmann, executive director of VDMA: "Protectionism and new trade barriers will not result in new jobs and additional growth – neither for the USA nor for its trade partners."

James Selka, CEO of MTA: "Great care must be taken during the negotiation process to protect manufacturing’s interests and we will be working hard in the UK and in Brussels for that outcome."

Moreover, the last year exposed another shocking truth: The political status is not a stable condition and can be changed drastically. Brexit was the first shock for the industry in July 2016, followed by the election of Donald Trump in the United States.

Made in China: from manufacturer of quantity to quality

There is a plus side of emerging markets in Asia: China is trying to get rid of its image as a supplier of cheap products. The slogan is to get away fom quantity and be a manufacturer of quality. As a result investments in high-quality machines and automisation made in Europe are increasing. German machine tool manufacturers reported an increase in orders from China of 30 % in the first nine months of 2016. China is clearly trying to become internationally competitive.

On the other hand, there are stories like Kuka's acquisition by Chinese company Midea. China, going from a country mostly famous for cheap labour to a country with highly innovative products, could become a danger to long-established companies from Europe. One possible future scenario is that in the long term China does not need to purchase high-quality machines in Europe, but is able to manufacture them on their own.

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