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Building on its traditional industrial base, Jinan is forging new levels of collaboration with German and other European enterprises through supportive policies, talent cultivation and innovation

By Xu Ming Updated Mar.1

Pictured is China-Europe Manufacturing International Enterprise Port, one of four industrial parks in the Sino-German SME (Jinan) Cooperation Zone, Jinan, Shandong Province (Photo: Courtesy of Wang Xiabing)

Students operate a drill press at the Sino-German Technical College, Jinan Vocational College, Shandong Province, July 2023 (Photo: Courtesy of Zhang Yaru)

Workers produce parts at the Jinan plant for German automotive ffltration and industrial fflter systems manufacturer Hengst, Jinan, Shandong Province, June 2023 (Photo: Courtesy of Zheng Huaixing)

On a crisp January morning, workers gathered in a clean and tidy workshop. Beside the production line sat boxes of newly manufactured filters.  

This was the scene at the factory of Hengst Filtration, a German manufacturer of automotive filtration and industrial filter systems in Jinan, Shandong Province. Work has picked up since the start of January due to an upsurge in orders for automotive filters, said Zheng Huaixing, operation manager of Hengst Filter Systems (Jinan) Co., Ltd. The first quarter of each year is usually peak season for orders from heavy truck manufacturers.  

With a 60-year history and headquartered in Münster, Germany, Hengst set up its second plant in China in 2019 in the Sino-German (Jinan) SME Cooperation Zone, which was established in 2017. Over the past four years, the Jinan plant has become an increasingly important manufacturing base for Hengst.  

Covering an area of 3,000 square meters, Hengst’s Jinan plant achieves an industrial value of 20 million yuan (US$2.8m) per mu of land in 2023.  

Hengst is one of many German enterprises that recognize the advantages Jinan offers in transportation, industrial foundation and business environment. Located in the Jinan Innovation Zone in northeastern Jinan, the Cooperation Zone covers 110 square kilometers, making it the largest of its kind in North China.  

Since its approval in 2017, the Cooperation Zone has aimed to become a home for German enterprises in China (along with a similar zone in Taicang, South China’s Jiangsu Province) while actively exploring Sino-German industrial cooperation. It hosts 1,300 companies, including 53 foreign-funded ones, covering sectors such as high-end manufacturing, electronic information and aviation. Over the past three years, the average annual output value of foreign-funded companies has accounted for 40 percent of the Cooperation Zone’s total output.  

‘Jinan Speed’ 
Hengst set up its first China location in Kunshan, Jiangsu Province, and the headquarters of the Hengst China region is also located in the Kunshan plant, according to Zheng. In 2018, Hengst made the strategic decision to establish a new factory in northern China. The move aimed to bring them closer to their major clients, Sinotruk Group and Weichai Power, both headquartered in Shandong. This enabled Hengst to manufacture products based on their specific upgrade requirements, while also reducing transport costs and improving overall efficiency.  

“In the past, we needed to transport materials and finished products between Shandong and Kunshan,” Zheng told NewsChina. “Now the entire production process could take place within Shandong, significantly reducing transportation time and costs. Delivery times are significantly cut too.”  

Zheng told NewsChina that Hengst benefited from Jinan’s efficiency from the start. “Before setting up the Jinan plant, we had inspected many cities and development zones. The Jinan Innovation Zone was our first and final choice,” Zheng said.  

After registering in June 2019, the factory was completed within two months, and all supporting facilities were being prepared for production. By October, Hengst was already able to fulfill orders from the new factory. “Considering that the pandemic hit two months later, Jinan’s speed saved us. If we hadn’t started operations on time and had to suspend orders, we would have been unable to meet the needs of important clients,” Zheng said.  

In 2022, Jinan plant has built several new industrial filtration production lines, and have already provided pollution filtration systems and hydraulic filtration systems to industrial customers plants in northern China.  

Another German company, VOSS Automotive Components (Jinan) Co. Ltd., is also recognized as one of the Cooperation Zone’s “hidden champions.” They provide system solutions for vehicle construction and count heavy truck manufacturers like Sinotruk and Dongfeng, as well as new energy vehicle producers like NIO and Xpeng, among their clients. VOSS (Jinan) also exports to countries including South Korea and Japan.  

Tu Lei, HR & admin area manager of VOSS (Jinan), told NewsChina that the company chose to establish a factory in Jinan in 2007 before the Cooperation Zone was even established. They had recognized the significant market potential for commercial vehicles in China, the largest automotive market globally. Additionally, it was at a time when Chinese manufacturers were upgrading technology and improving vehicle quality to meet higher demand in overseas markets. “Domestic manufacturers seeking technical upgrading and foreign component suppliers with advanced technology and products easily found common ground,” Tu said.  

Unlike most foreign companies that manufacture in China, VOSS established its own R&D team in Jinan around 2015. This allowed them to meet client demand promptly and with greater flexibility. Furthermore, thanks to China’s fast-growing new energy vehicle segment, the team in Jinan now leads VOSS’s global R&D efforts in the field, often providing support for German engineers back at the company’s headquarters. “We have the advantage in China of being more exposed to market information and a diverse range of clients,” Tu said.  

Over the past 15 years, VOSS’s business turnover in China has soared from 20 million yuan (US$2.8m) to 1.5 billion yuan (US$210m) in 2021, a 75-fold increase, according to Tu. By November 2023, the company had hired over 2,000 employees, with more than 90 percent of them from Jinan.  

Tu attributed this rapid development in part to consistent support from the local government, local policies and higher education in Shandong. Tu said the improvements in transportation within the zone, including an airport, expressway, railway station and subway were of great significance. “They not only benefit our clients but also our employees,” Tu said.  

Clear and Sincere 
Li Tao, vice director of the management committee of the Jinan Innovation Zone, remembered when he brought the first group of prospective German clients to the site seven years ago.  

“There was not even any level land,” Li said.  

Before the company representatives arrived, they flattened out the land and paved it. However, their efforts were initially met with skepticism.  

“The negotiations were tough. We could only convince them through our clearly positioned industrial plans and pledges of optimal policy support,” Li said.  

Though starting from scratch, the zone was built according to international standards to accommodate major projects. Renowned planning companies were brought in to create an industrial map and design plants.  

“We hoped to attract projects dedicated to practical industrial development that could stimulate local economic development instead of speculative real estate developers,” Li said.  

BMTS Technology, a high-tech automotive components manufacturer based in Stuttgart, was the first to settle in the Jinan Innovation Zone in 2019 after rounds of tough negotiations. “It was big news at that time,” Li said.  

Previously, Taicang was the top destination for German enterprises entering China thanks to its advantage in ports and geographical proximity to Shanghai. “We could only attract German enterprises by offering precise industrial planning, consistent efforts and good services,” Li said. 

“Jinan boasts a comprehensive industrial system covering 41 industries and 31 manufacturing categories, which is rare even nationwide. It has the essentials for developing the real economy, with ample industrial facilities and talent,” Li added.  

In 2011, Germany introduced Industrie 4.0, a concept that involves a comprehensive digital transformation of the manufacturing industry. “It aligns well with China’s ‘Made in China 2025’ national strategy for developing the manufacturing sector,” Li said.  
The Jinan Innovation Zone stands out as an exceptional transportation hub, accessible through high-speed rail, freight rail and air, but also a river that provides a direct route to coastal ports. 

European freight trains departing from Jinan have extended their reach to over 40 cities across 20 European and Asian countries. On December 28, 2023, Jinan celebrated the departure of its 1,000th China-Europe freight train. To accommodate the growing transportation demand, both the expressway and airport are undergoing expansion.  

To better serve its companies, the Jinan Innovation Zone has continuously worked toward streamlining its services. A notable example occurred in 2018, when the zone established a “one-stop” process for business registration and industrial and commercial registration for foreign-funded enterprises. In 2020, the registration process was further simplified, allowing the establishment of foreign-funded enterprises to be completed solely through the industrial and commercial department.  

The zone also provides customized, hands-on services for foreign investment projects. In 2019, it took nine months for BMTS Technology to go from signing to production, including establishing an Industrie 4.0-compliant factory. For Hengst, it only took three months.  

What’s more, the local government has been actively working to build new housing, hotels and hospitals, aiming to offer enterprises within the zone first-class living accommodations and business services.  

The Jinan Innovation Zone is also committed to elevating the standards of intellectual property creation, utilization, protection, management and services. It has been recognized as a national-level demonstration zone for building a robust intellectual property ecosystem. The zone’s overseas intellectual property service platform provides services to 65 countries and regions worldwide.  

The Cooperation Zone has emerged as a paradigm for international manufacturing cooperation, housing four industrial parks. As of late 2023, the zone’s 1,300 enterprises generate 50,000 jobs. Renowned German industry leaders such as Bosch, Continental, VOSS and Hengst have all experienced remarkable success in their fields within the zone.  

Between 2016 and 2023, fixed investment in the zone rose from 7.69 billion yuan (US$1.08b) to 21.3 billion yuan (US$2.98b), while the value of industrial output surged nearly five times from 4.1 billion yuan (US$574.1m) to 20 billion yuan (US$2.8b) in the past six years, according to data from the Jinan Innovation Zone management committee.  

These successes boosted growth in the Jinan Innovation Zone and the city of Jinan. In 2022, the Jinan Innovation Zone’s total output value surpassed 160 billion yuan (US$22.4b), while its total import and export value accounted for over 50 percent of the city’s total and one-third of Jinan’s foreign investment.  

By October 2023, 86 Fortune Global 500 companies had invested in Jinan. Between January and September 2023, 193 foreign companies settled in Jinan, a year-on-year increase of 14.2 percent. The city’s actual utilization of foreign investment reached US$2.2 billion, ranking second in Shandong in terms of total volume.  

Young Apprentices
In addition to industrial cooperation, Jinan has pursued deeper collaboration in the cultivation of talent with foreign-funded enterprises.  

Since 2011, VOSS (Jinan) has entrusted Jinan Vocational College (JVC) with cultivating around 10 technical professionals every year to work with them after graduation. JVC is one of the first vocational colleges in China to adopt the German dual apprenticeship system, which combines classroom education with on-the-job training.  

According to Zhang Yaru, director of JVC’s Sino-German Technical College, the collaboration began in 2011 when five German companies, including automation company Festo, expressed their need for highly skilled professionals with dual apprenticeship backgrounds.  

In response, JVC set up the Sino-German Technical College with its dual apprenticeship focus, in cooperation with the German Chamber of Commerce and Industry, Festo (China) and the German Handicraft Association.  

Every October or November, following the enrollment of new students, companies organize job fairs at the college. “Upon enrollment, students enter into apprenticeship contracts with enterprises, which develop customized training programs and provide student stipends. For these students, enrollment also means employment,” Zhang said.  

Foreign enterprises in Jinan also collaborate with Shandong’s universities. Tu told NewsChina that VOSS maintains long-term partnerships with Shandong University and the Shandong University of Technology. By signing employment contracts 6-12 months before graduation, students have the opportunity to undergo rotational training before settling into key technical posts upon graduation.  

In 2014, the Jinan-based Qilu University of Technology collaborated with DIPLOMA Fachhochschule Nordhessen, a private application-oriented college in Hesse, Germany to launch a program focusing on mechanical design, manufacturing and automation to cultivate German-speaking Chinese professionals.  

According to Tu, these efforts exemplify the commitment and resolve of the local government in improving services for foreign-funded enterprises. “We can sense that they prioritize the long-term interests of companies,” he added.  

In September 2023, VOSS executives visited China to assess the situation following the three-year pandemic. “In the Cooperation Zone, they witnessed the emergence of new plants, one after another,” Tu said. “These positive experiences boosted their confidence in continuing to invest in China.”  

Tu revealed that a new expansion project in the Cooperation Zone is under discussion, with plans for VOSS’s Jinan factory to expand capacity and develop new products for sectors such as autonomous driving and hydrogen cars.  

“We hope to build the Cooperation Zone into a national-level demonstration zone for deep international industrial cooperation and comprehensive innovative cooperation between China and Germany, as well as Europe,” Li Tao with the Jinan Innovation Zone management committee said.