CEO of Germany’s Merck: decoupling from China would be at huge economic cost

By Ludwig Burger and Patricia Weiss

FRANKFURT (Reuters) – The CEO of German technology group Merck KGaA said that unravelling trade ties with China would come at great economic cost and she was banking on dialogue to ease tensions between Beijing and Western powers.

Belen Garijo, the Spanish CEO of the German drugmaker and manufacturer of lab equipment and semiconductor chemicals, said late on Monday that dependencies between the powers were huge, speaking at a journalist club event in Frankfurt.

Over the weekend, a Chinese warship crossed in front of a U.S. destroyer in the sensitive Taiwan Strait, raising the prospect of future face-offs. But the two sides on Tuesday described meetings between senior U.S. and Chinese officials after the incident as constructive.

For months, U.S. and German lawmakers have called for a reduction in trade to cut dependency on China.

“When I hear politicians say we have to decouple, I don’t think this is feasible … it will take 20 years to decouple, and for what?” said Garijo.

“We are risking a global world that has brought wellbeing, more innovation, more collaboration.”

CEO of Germany's Merck: decoupling from China would be at huge economic cost
Merck KGaA CEO Belen Garijo, poses for a picture before speaking to the international club of journalists in Frankfurt, Germany, June 5, 2023. REUTERS/Ludwig Burger

Merck has said its roots in China go back nearly 90 years. Last year the country accounted for 3.2 billion euros ($3.4 billion) of 22.2 billion euros in group sales, with products including bioreactor gear as well as chemicals for making microchips and flat screens.

The company’s finance chief last month said that Merck would further invest in China and would build domestic supply chains there to curb imports of key raw materials that could be disrupted in any trade row.

CEO Garijo said the company would look closely into “different scenarios on the basis of the potential escalation of the conflict”, but such an escalation was not likely.

German Economy Minister Robert Habeck in March suggested that Berlin could impose export restrictions on China to prevent Germany from losing its technological edge, and the government under Chancellor Olaf Scholz’s is working on a strategy paper on China to be rolled out this year.

($1 = 0.9357 euros)