Across borders

Siemens and China – Milestones in a successful  partnership

Siemens has been active in China since 1872. Over the course of more than 145 years, a collaborative partnership has been established based on trust. From the delivery of the first pointer telegraph to the construction of power plants and the Memorandum of Understanding between Siemens and China in 1985, the company has always been an innovative and reliable partner across national and continental boundaries.

We will probably soon get started in China. The ambassador here has reported back to China and as a result the Chinese administration ... has expressed a wish to obtain dynamos from us.
Werner von Siemens, 1879

Step by step – Siemens China becomes Siemens’ largest regional company

With these lines written to his brother Carl in 1879, Werner von Siemens noted the beginning of relationships with China. Although Siemens had already supplied the first pointer telegraphs to the far-off land in 1872, it took an additional seven years and cooperating with local German trading houses to establish a lively business selling telegraphs, telephones, and water meters to China. This was soon followed by large projects that included the Peking tram line, power plants, a steel plant, and the first high-voltage power line in the country. To meet the growing demands – and initially still working with a German sales agent – Siemens founded the Technical Bureau (sales office) in Shanghai in early 1904. It was the nucleus for the first independent Siemens office in the Middle Kingdom established on June 30, 1910. Little by little, additional offices were opened in other locations, including Peking (1910), Hong Kong (1911), and Chengdu (1913).

Siemens experienced a difficult phase between 1914 and 1918. There were few orders for a German company in China during World War One and sales fell from over four million to half a million marks. Before and after the war, however, Siemens’ China business prospered. The company’s excellent reputation in China and the reliability of its products were distinct advantages. In the 1920s and 1930s in particular, “Siemens China Co.” (as the Shanghai office had officially been called since 1914) enjoyed a rapid ascent. With large orders for building power plants in Shanghai, Harbin, Nanjing, and Guangzhou, the Chinese office became the company’s largest outside Europe. By 1925, the Regional Company consisted of a total of ten sub-offices and eleven agencies, making the new sales network Siemens’ largest outside Germany.

Turning point – China cautiously opens up to the West

Nevertheless, the economically successful phase of the interwar period came to an end. World War Two, the following Cold War, and the Chinese Cultural Revolution under Mao Zedong largely prevented direct communication and business had to be conducted via third parties such as the Hong Kong-based Danish firm Jebsen & Co. At that time, Siemens mainly delivered medical equipment to China. But the times then changed – on both sides: China opened up to the West again and the Federal Republic of Germany resumed diplomatic relationships with the People’s Republic in 1972. Only two years later Siemens was able to post a first major order for 14 steam turbines, and almost 40,000 Chinese technology specialists visited the Siemens exhibition “Electrical engineering and electronics” held in Shanghai in 1978 to see the company’s entire spectrum of technical competence. The earlier, excellent cooperation between the German company and China was now paying off. Even after the opening of the company’s own representative office four years later, the possibilities for expansion given the size of the market and the duration of the relationships still looked very promising.

Strong partnership – Siemens know-how for the Middle Kingdom

The turning point was marked by the “Memorandum of Comprehensive Cooperation between Siemens and China’s mechanical engineering, electrical, and electronics industries” of October 29, 1985. It enabled relationships between Siemens and the People’s Republic of China to acquire an entirely new quality. The cornerstone was intensive technology and knowledge transfer which went far beyond the sale of products by also providing for the training of the Chinese partners locally and in Germany and for the establishment of joint ventures. In addition, a joint coordination team was installed to monitor the progress of the cooperation and decide on subsequent steps. This framework agreement established long-term, systematic, comprehensive cooperation between Siemens and China for the purpose of modernizing China’s mechanical engineering, electrical, and electronics industries. Siemens was the only foreign company to be invited to participate in such a collaboration. Based on this Memorandum, there was a rapid expansion of the partnership over subsequent years that involved large orders in the power plant, communications, medical, and transportation technology sectors.