Mr. Wuttke, you are European, have spent more than 30 years in China, and have been living in the United States for a year now. In your opinion, which region is currently decisive for global innovation?
China plays a big role here. Customers there are extremely demanding and always want the latest products straight away. Take mobility, for example: In Germany we make cars, in China they make cell phones on wheels. Adjusting to this is putting incredible pressure on the entire supply chain—including the chemical industry, for which China accounts for around half of the global market.
How does China manage to produce this amount of innovation?
It does this by producing talent like no other country. You have a huge pool of people there who drive developments forward and a large number of top universities for engineering and chemistry. At the same time, the government in Beijing is promoting strategically important industries on a grand scale: electric vehicles, wind turbines, batteries, solar, and so on. There is money and a clear commitment to make certain sectors the best in the world. In Europe, especially in Germany, we have too much “on and off”—such as with the Building Energy Act—which makes planned innovations difficult.
In many sectors, from solar energy to battery technology, Chinese companies have left Europe behind—even though the underlying inventions were not even made there. Why did that happen?
The razor-sharp competition in the Chinese economy means that companies there rarely conduct basic research. They are more interested in developing a product from an existing idea. The Chinese are superb at bringing technologies to market faster, better, and cheaper than their inventors. They didn’t invent the battery, the Koreans and Japanese did. But they have understood best how to further develop and market the product to meet the needs of users.
In other words, precisely what European companies sometimes find difficult.
Exactly. European companies that are active in China have an easier time of it. The country resembles a fitness center. The people in the laboratories of European companies in Shanghai, Chengdu or Nanjing know that they have to be fast to keep up with their local competitors. At the same time, the customers’ willingness to take risks is transferred to the developers. You don’t always need a solution with a belt and suspenders to keep your pants from slipping. You have to put a development on the market now and then.
However, Beijing is increasingly regulating access to this fitness center. Imports from Europe to China are falling—as is direct investment. How will this affect the innovation process?
The figures are actually going down—at least when it comes to products from the “sunset industry,” such as cars with combustion engines. At the same time, the country is striving for greater self-sufficiency, for example in medicine. These efforts are a huge challenge. Foreign companies working in China for China can continue to benefit from the clusters in the country. It is important that they also apply the knowledge they gain there elsewhere. The compartmental thinking in some companies is still very rigid.
»We don’t have a government in Europe that pushes the battery market«
Jörg Wuttke Dentons Global Advisors-Albright Stonebridge Group
Despite all our admiration for the Chinese spirit of innovation, an autocratic system that can control many things also leads to problems.
Yes. Corruption, nepotism, and financial waste are the order of the day. Out of 140 car brands in China, no more than 20 make a profit. Although a lot of money is put into the system, in the end only a few champions emerge. But they have it all, just think of the AI company DeepSeek.
What can pluralistic systems learn from the Chinese?
We don’t have a government in Europe that pushes the battery market by creating the necessary demand itself, for example. We tend to do this via regulations. That costs speed. However, we have already succeeded once in providing the money for a product that is now a global market leader thanks to a clever industrial policy.
Are you talking about the aerospace group Airbus?
That’s right. The state should stay out of market-based mechanisms and generally tend to deregulate. But sometimes the complexity and risk are so great that the state has to provide support.
Is there any other sector that you think has such strategic importance?
The arms industry is an example. Developments in this field could enable European companies to move into high-tech areas that also have an impact on other sectors of the economy, such as the development of drones for civilian use or high-performance alloys. Similar to the US space agency NASA, whose developments also gave rise to products such as Teflon and the Internet. Biotechnology is another field that Europe can occupy. We are already really good there and the Chinese are comparatively weak.
In 2024, former ECB President Mario Draghi was commissioned by the European Commission to investigate why Europe is falling behind when it comes to innovation. In his report, he proposes, among other things, increasing government spending on research by 200 billion euros. Would that help?
The formula for success is “brain meets money meets market.” We need the right people to drive innovation. Our education system needs to generate more enthusiasm for science—especially in Germany. That starts in kindergarten. Second is digitalization. I took my children out of the German school in Beijing in 2020, where there was still a strong emphasis on books and paper. They switched to the American school, where everything took place on tablets and the students even built robots. That’s another reason why we moved to America in 2024, not Germany.
It is of course ironic that the new US president is now so vehemently opposed to an open society and is trampling on science. I’m becoming more and more Chinese here.
It will be many years before chemistry sets in nurseries and tablets in schools have an impact. We probably don’t have that much time.
Correct. That’s why we should now bring in top people from abroad. Europe has a good opportunity for this right now: on the one hand because of the over-politicized landscape in China, and on the other because of the tensions between Beijing and Washington. Things don’t look bad for Europe.
How can we attract these people to Europe?
We have to show that we are attractive to highly qualified specialists. Governments must follow suit and reduce regulations for foreign workers. Of course, we have to make sure that we don’t invite anyone who will just siphon off knowledge. We could very easily identify people we would like to bring here via European companies in China. This is another reason why we should not withdraw from this market, even if it becomes smaller.
“People are noticing that parties like the AfD are gaining support – and drawing their own conclusions.”
How do we mobilize more venture capital? Without venture capital, Silicon Valley would not exist. And in China, 80 percent of research funding comes from the private sector.
The willingness of investors to take risks will be of enormous importance in the coming years in order to fund research and development expenditure and reduce the gap with China. Many venture capitalists I dealt with in Beijing are leaving the country because of the growing uncertainty in the economy. They go to Tokyo, Abu Dhabi or Singapore. I couldn’t get anyone interested in Germany. This is due to the language. But people are also noticing that parties like the AfD are gaining support—and are drawing their own conclusions.
So we have to make it on our own?
Most importantly, we need to overcome the fragmentation of the European venture capital market. There is no uniform legal framework, which hinders investments and fundraising across borders.
We have talked a lot about what Europe can learn from China. Can you give us any lessons from your new home in America?
America’s great strength has always been the capital market: Wall Street and the venture capital system. This is how people were supported who set up “unicorns” in their garages. It’s worth taking a look at this. In addition, the USA has long been able to attract the best minds in the world. It is difficult to understand why this is currently being prevented—and certainly not something we should take as an example.
You have been living abroad since the 1990s. What would have to happen for you to return to Europe?
The mood in the USA has changed completely since the beginning of the year. My colleagues are increasingly asking themselves: What can I post? What will be viewed critically? My wife has a Russian passport. And although she has a valid visa, we hope that she will be able to return without any problems after our vacation in Germany. First of all, our youngest son has to finish school here. We’ll see what happens afterwards.
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