Siemens unveils big investments in China and Singapore factories

The German industrial conglomerate Siemens has announced significant investments in factories in China and Singapore, as it pursues a strategy of diversifying in Asia while expanding in the Chinese market despite growing geopolitical tensions.

Chief executive Roland Busch told a news conference in Singapore on Thursday that Siemens would invest €2bn globally this year to increase its manufacturing capacity, starting with a factory expansion in China and the opening of a high-tech plant in the city-state.

The doubling down on China comes after Busch had described it as a driver of technological innovation, but Siemens is also hedging against overreliance on a country where US restrictions have been making it difficult to operate — by choosing Singapore as a hub for exports into south and south-east Asia.

“I avoid the word decoupling, because decoupling means deciding either/or and nobody wants to do that . . . the difference is diversification, which is looking at how you can serve more markets . . . which makes you at the same time more resilient,” Busch told reporters on Thursday.

Siemens’ new €200mn plant in Singapore, which is set to employ 400 people, will produce digital twin and “intelligent hardware” technologies for companies in the region.

The conglomerate will also invest €140mn to expand by 40 per cent a plant in Chengdu, south-west China, which makes software to control robots and other industrial machines. However, this would continue to “serve the local growth opportunities in China for China”. It comes alongside a new research and development centre in Shenzhen that will “speed up development of motion control systems”.

Siemens said the high-tech investments in China were being made because of customers in the region being “early adopters of new technologies especially in digitalisation and high-tech manufacturing”, echoing comments Busch made to the Financial Times last month.

“Where can I find the customers which pull me into the next level of innovation, which are demanding, and which are looking for the next technology?” he said at the time. “It’s China in very many cases.”

But Siemens’ China strategy has been questioned by investors, who are becoming wary of any dependence on the country, amid calls from Berlin for the German industry to diversify.

Germany’s government noted yesterday, as it unveiled its first-ever national security strategy, that its largest trade partner China had in recent years become a growing threat to international security.

The German publication WirtschaftsWoche reported that Busch had originally wanted the Singapore plant to be based in China, but that he yielded following protests from members of his supervisory board.

Busch on Thursday described the increasingly volatile relationship between the US and China, by saying that “we have this race for who is number one in the world — and this causes some tensions”.

Siemens’ diversification strategy, however, had mainly been prompted by the pandemic when companies realised “a very, very strong dependency on certain supplies from certain countries, or even individual companies”.

“The whole world is now working on reducing those dependencies,” Busch said.