Scope Relies on Political Intervention

Governance, Reviews

“Uniper withdraws its 2022 financial outlook amid Russian gas supply restrictions” – That’s the title of an action-free press release from a Berlin rating agency, called Scope Ratings, today: “This monitoring note does not constitute a credit rating action, nor does it indicate the likelihood that Scope will conduct a credit rating action in the short term. Information about the latest credit rating action connected with this monitoring note along with the associated rating history can be found on”

Scope had placed Uniper’s BBB+ rating under review for possible downgrade on March 14, 2022. However, five days after Uniper announced the most recent bad news, the rating agency still lacks the strength to decide on a downgrade. The uncertainty factors are well known to the rating agency: “The company [i.e. Uniper] is examining how to secure its liquidity, and it has entered into discussions with the German government on possible stabilisation measures.”

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Formerly BB, Now Under Supervisor’s Scrutiny

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“Because the bonds purchased by the Adler Group no longer meet the requirements of the ECB, the central bank has now thrown them out of its portfolio in a move that caused a stir”, that is what the Börsen-Zeitung writes today.

Only rating reports from S&P Global Ratings are available on the Adler website, the latest reports uploaded by ADLER Real Estate AG are from September 2018.

Back in May 31, 2021 Moody’s Investors Service had withdrawn the Ba2 long-term corporate family rating (CFR), the Not Prime (NP) short-term issuer rating and the Ba2 rating of ADLER Group S.A.‘s 1.5% fixed rate senior unsecured Euronotes due in 2024. Moody’s has also withdrawn the stable outlook. Moody’s has decided to withdraw the ratings for its own business reasons and wrote: “ADLER Group S.A. is one of the largest residential landlords and property developers in Germany. The company owns almost 70,000 residential units and a €11.4 billion real estate portfolio.”

A Berlin rating agency wrote on October 15, 2021:

“Scope Ratings GmbH (Scope) has today downgraded the corporate issuer rating on German real estate company Adler Real Estate AG to BB- from BB and its senior unsecured debt rating to BB from BB+. The Outlook has been revised to Negative. The Ratings and Outlook have also been withdrawn for commercial reasons, as future capital market debt issuance will take place at the Adler Group S.A. level and there is no longer a need for a rating on Adler Real Estate AG.”

With a decision dated June 17, 2022, the Federal Financial Supervisory Authority ordered an audit of the approved consolidated financial statements as of the December 31, 2021 reporting date and the combined management report for the 2021 financial year of ADLER Real Estate Aktiengesellschaft in accordance with Section 107 (1) sentence 1 WpHG.

The reasons for the order are, firstly, indications that relationships and business transactions from this year or earlier years with related persons or companies within the meaning of International Accounting Standard (IAS) 24 may not have been fully and correctly recorded and presented in the group accounting; and secondly, the negative opinion of the group auditor, KPMG AG Wirtschaftsprüfungsgesellschaft, for the consolidated financial statements as of December 31, 2021 and the combined management report for the 2021 financial year.

The balance sheet control audits in relation to the financial statements and management reports for 2020 and 2019 of ADLER Real Estate Aktiengesellschaft are still ongoing.

Investor concerns about the real estate group Adler Group SA are now being underscored by a sale of securities that is a rarity. The European Central Bank has sold a bond issued by the company, which it once bought as part of its corporate bond-buying programme.

““The Adler bond in question no longer fulfills the Eurosystem collateral framework eligibility criteria and is therefore no longer CSPP-eligible,” central bank spokesman William Lelieveldt told Bloomberg, referring to the ECB’s corporate sector purchase program. According to Lelieveldt, the decision to sell is in line with the legal framework for the bond purchases. After that, the ECB could sell bonds if they lose central bank eligibility, but doesn’t have to.

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New Political and Economic Burdens Ignored


Scope affirms Ilija Batljan Invest AB’s issuer rating at BBB-/Stable. This news must come as a surprise given the current economic and political challenges that have meanwhile added to the factors that already made an “investment grade” rating seem questionable last year.

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Where Is the Opinion of the Rating Agency


Moody’s credit ratings for MAHLE GmbH is just below investment grade, Ba1 (LT Corporate Family Ratings, since April 7, 2021). The credit rating is not on Watch, the outlook stable. Recent news could cause this situation to change.

MAHLE and Matthias Arleth (54), Chairman of the Management Board and CEO, have decided to terminate their cooperation by “mutual agreement”, it says so in the press release. This step is due to differing opinions on the future strategic orientation of the group. It seems questionable whether the rating agency was informed of this development in good time.

Arleth had joined the technology group only in January 2022. Until a decision on a successor as CEO has been taken by the Supervisory Board, Michael Frick (55), Deputy Chairman of the Management Board and CFO, is to act as Chairman of the Management Board.

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Exploring the DeFi Ecosystem


Decentralized Finance (DeFi) presents limited risks to the mainstream financial system as, barring stablecoins, it is largely separate and not yet systemic in size. Nevertheless, alongside market and liquidity risks, fraud is a significant risk with DeFi transactions.

While a smaller rating agency is hardly able to slow down enthusiastic investors, but – on the contrary – emphasizes the opportunities, the warnings of one of the leading rating agencies cannot be ignored.

Hardly any development on the international financial markets is not commented on by one of the leading credit rating agencies. The rating agencies also provide valuable descriptions of market conditions and dependencies. It is therefore remarkable how little has been said so far about cryptocurrencies and Decentralized Finance (DeFi).

That is now changing with a comprehensive documentation presented by one of the three leading rating agencies. So far, mainly a smaller rating agency, Weiss Ratings, has dealt with the market with a certain euphoria. Now one of the heavyweights among the international credit rating agencies is following suit.

First, let’s look at recent comments from Weiss Ratings. “No matter how the crypto market is moving,” This is what the rating agency Weiss Ratings, founded in 1971, writes to its subscribers, “there are ways to earn double-digit yields in the exploding sector of decentralized finance (DeFi).”

This agency belongs to the rating agencies in the USA, which are not recognized as a National Recognized Statistical Rating Organization by the US Securities and Exchange Commission.

In the crypto segment, Financial News Anchor Jessica Borg interviews Weiss Crypto income specialist Marko Grujic, editor of Crypto Yield Hunter, about earning interest with tokens that have little to no volatility:

“Even if you’ve never invested in crypto,” says “Weiss Ratings Daily” on April 9, 2022 under the title “Sunset for the Bull”, “chances are you’re hearing about this week’s price action of the largest cryptocurrency by market cap: Bitcoin (BTC). After months of staying in the same trading range, BTC broke out surging near $48,000 and gaining 15% in just seven days. And when the market leader does well, you can expect altcoins — any crypto other than Bitcoin — to follow suit.”

The rating agency uses bold words to promote the belief that other cryptocurrencies will also benefit.

“There are a couple of reasons behind BTC’s bullish momentum”, according to the analysis of the rating agency: “One is a new wave of institutional investors. The second factor is geopolitical instability in the East. In recent weeks, Ukrainian and Russian citizens have rushed to the crypto space in hopes of protecting their wealth.”

What does one of the three leading rating agencies say about these developments?

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Guard the Livinguard


Face masks change the appearance of people, but also of companies.

The corona pandemic made many managers really familiar with video conferencing technologies. But it is still unusual when a member of the board of directors of a stock corporation gives its long-awaited lecture in front of around 70 participants from his moving car. He is also available for questions and answers – until a dead zone literally leaves the participants in the dark. “Antiviral face masks: How a start-up stirs up the world market” is the topic of this event.

Unusual entrepreneurs have unusual stories to tell. So the appearance described by Sanjeev Swamy, Chief Technology Officer of the spectacular Livinguard AG, which is based in Bahnhofstrasse in the Swiss city of Zug, fits the company’s claim. He raised money from KKR for his company.

“I first conceived of the Livinguard technology in 2010 when posed with an interesting technical challenge from a British Brigadier General friend. Since then, my partners and colleagues who have joined this journey have taken this technology beyond what I could have imagined back then. I am deeply humbled by our unique ability to help people and our planet today, and this couldn’t have been possible without years of learning from failure”, says Sanjeev Swamy.

There have been enough setbacks in the life of the Indian and now Switzerland fan. Sanjeev Swamy, born in 1961, has already experienced a lot. He reports that a factory in India burned down completely and he is still waiting for the insurance money. For him, other economic tragedies are not only associated with Douceur Sportswear Mgf. Co. Pvt. Ltd. in Mumbai, India, but also in Germany with Douceur Brands Germany GmbH, HUCKE BERLIN GmbH, BUSCH Fashion GmbH, Whoopi Fashion GmbH or Douceur Retail GmbH.

With his new attempt, Livinguard AG, Sanjeev Swamy is once again combining his technical ideas with experience from the textile industry. “The Livinguard technology has been scientifically proven to destroy >99.9% of SARS-CoV-2,” enthuses Sanjeev Swamy.

crime scene do not cross signage

TV Episode on the Social Credit System in a German Soap Opera Crime Thriller


The topic of the social credit system is taken up in a humorous crime series on German state television.

On Saturday, February 20, 2021, the episode is not only available online, but can also be seen on television at 8:15 p.m. on Second German Television (ZDF).

The fictitious story: Georg Wilsberg (Leonard Lansink) is a passionate book antiquarian in the German city of Münster. Since he is always short of money, he also takes on jobs as a private detective. He often calls in his best friend Ekki (Oliver Korittke) and his goddaughter and niece Alex (Ina Paule Klink) for his investigations – often against their will.

Citizens who behave socially are credited with points, and they enjoy numerous privileges based on their point balance. When the general manager of the social credit company is suddenly found dead, Wilsberg is certain: It was murder.

The victim left an encrypted USB stick that Wilsberg found together with his client Christine Lau. Anna Springer is meanwhile suspended because her score is catastrophic. Nevertheless, with the help of Overbeck and Merle, she manages to decrypt part of the data on the USB stick.

The large corporation headed by Juliane Hell has been collecting incriminating material about important decision-makers for years. These were apparently put under pressure to get approval to publish the social credit app. In the media, however, the success of the app is still only reported unilaterally. What is this company up to?

Ekki is thrilled that his good behavior will finally be rewarded and is initially reluctant to help Wilsberg. He lets himself be persuaded to do an unpaid internship at the social credit company, but hopes to find exculpatory material instead of evidence of the murder. Alex, who works as a lawyer for the large corporation, is anything but happy about Ekki’s undercover investigation on behalf of Wilsberg. Security chief Adam Schenk is also targeting Ekki critically. But the citizens’ initiative against the social credit system around activist Bernd Anger has apparently been infiltrated by a mole.

Wilsberg sees no other chance than to publish all of the material as quickly as possible. And he is promptly in danger. Is the data on the stick so dangerous for the company that those responsible go to cover up corpses?

Actually, the shooting of the new ZDF crime thriller “Wilsberg” should already take place in April 2020 and that for two weeks. But then there was Corona and with the pandemic the lockdown, so no more shooting for now. In the meantime, shooting was taking place again in North Rhine-Westphalia, but only under very strict security requirements for teams and actors. That’s why the Wilsberg crew stayed in Münster for only three days this time, but at least one of the scenes filmed in Münster was all the more spectacular: the crime showdown in the Botanical Garden – as the film service Münster.Land found out about the production.

The 71st episode in total was staged as a science fiction comedy based on the script by David Ungureit by Dominic Müller. Above all, it thrives on the contrast between the supposedly good old days and the dangers that the Internet could bring with it.

Even if words are used in this film that sound like the social credit system in China, it has to be underlined that the story is fictitious and has nothing to do with reality in either China or Germany.

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Grenke’s Supervisory Board Goes Into Detail

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S&P’s Issuer Credit Rating of Grenke AG

Rating TypeRatingLast Review DateCredit Watch/ OutlookCredit Watch/ Outlook Date
Local Currency LTBBB+10-Dec-2020Negative10-Dec-2020
Local Currency STA-210-Dec-2020NM10-Dec-2020
Foreign Currency LTBBB+10-Dec-2020Negative10-Dec-2020
Foreign Currency STA-210-Dec-2020NM10-Dec-2020

“We have heard your call for more transparency regarding the resignation of our Board of Directors member, Mark Kindermann, loud and clear and would like to respond to it in detail”, writes Prof. Dr. Ernst-Moritz Lipp, Chairman of the Supervisory Board of GRENKE AG to “GRENKE investors”.

The alleged Grenke scandal has so far had little impact on the ratings. In its latest analysis, dated December 11, 2020 the rating agency Standard & Poor’s affirmed the Group’s counterparty credit rating BBB+ / A-2. S&P’s outlook on the long term rating is negative. With the 8th of October 2020, GBB Rating has confirmed the A-Rating but changed the outlook from “stable” to “negative” because of the current situation, says GRENKE on its website.

According to § 111 German Stock Corporation Act (Aktiengesetz, AktG), the supervisory board is to supervise the management board. The supervisory board may inspect and audit the books and records of the company as well as its assets, particularly the company’s cash and the inventory of securities and goods. It may also instruct individual members to perform these tasks, or may commission special experts for certain tasks. The supervisory board shall instruct the auditor of the annual accounts to audit the annual accounts and consolidated financial statements pursuant to section 290 of the Commercial Code (HGB). Moreover, the supervisory board may instruct that an external audit be performed of the substance of the non-financial statement or of the separate non-financial report (section 289b of the Commercial Code), or of the consolidated non-financial statement or the separate consolidated non-financial report (section 315b of the Commercial Code).

The Federal Financial Supervisory Authority’s (Bundesanstalt für Finanzdienstleistungsaufsicht, BaFin) criticism of Internal Audit and Compliance processes in the course of the ongoing audits by Mazars was the imminent reason for Mark Kindermann’s resignation. In the course of the ongoing audits by KPMG and Mazars, there had already been some qualitative indications and findings regarding the Internal Audit and Compliance organisation.

According to Ernst-Moritz Lipp, BaFin’s criticisms related to

  • the quality of working papers,
  • the ability of the Board of Directors to discard identified deficiencies,
  • to the fact that Internal Audit did not initiate its own investigation into the Viceroy allegations,
  • the quantitative staffing of Internal Audit, and
  • to Internal Audit’s restricted access to certain company confidential information until the beginning of 2020,
  • procedural weaknesses in the documentation of related parties at the Compliance function,
  • insufficient traceability of updates to the Compliance manual,
  • questions about the metrics for assessing compliance risks,
  • insufficient documentation of the Compliance function’s written annual reports, and, again,
  • inadequate staffing of the Compliance function.

The Supervisory Board, reports its Chairman, discussed the points of criticism and possible consequences with Mark Kindermann after his deadline to submit comments had expired. As a result, Mark Kindermann resigned.

“The uncertainty that has prevailed since September is weighing heavily on our stock and bonds”, admits Ernst-Moritz Lipp. ” The audits are also requiring considerable management and personnel capacities from the company. It is a top priority for the company that we continue and conclude the ongoing audits swiftly. Naturally, we are consistently addressing the findings of the audits and further refining the processes.”

The Chairman of the Supervisory Board of GRENKE AG reports on what has already been done in recent months: “Last October, for example, we transferred the Internal Audit function from Mark Kindermann to CEO Antje Leminsky, and at the beginning of 2021 we transferred the Compliance function to Isabel Rösler, our new Chief Risk Officer (CRO). In addition, suitably qualified personnel are being sought for both Internal Audit and Compliance, because we want to expand the workforce in the short term.”

In the German two-tier board system there is an executive board (all executive directors) and a separate supervisory board (all non-executive directors). The chairman of the supervisory board is the equivalent of the chairman of a single-tier board, while the chairman of the management board is reckoned as the company’s CEO or managing director. These positions are almost always held by separate people. According to Aktiengesetz, supervisory board oversees and appoints the members of the management board and must approve major business decisions. The supervisory board, in theory, is intended to provide a monitoring role. The question therefore arises as to whether the line between supervision and management has already been exceeded at Grenke.

“Since December,” writes Ernst-Moritz Lipp to Grenke investors, “we have been working with an independent consulting firm to review the processes for Internal Audit and Compliance and further develop both areas.”

“Further,” writes Ernst-Moritz Lipp, “the Supervisory Board has decided to reallocate Mark Kindermann’s remaining responsibilities as follows: Antje Leminsky, Chairwoman of the Board of Directors, will assume responsibility for Human Resources. Isabel Rösler will also take over key administrative functions in the back office with immediate effect. Sebastian Hirsch, who was appointed Chief Financial Officer (CFO) in October 2020, will additionally be given responsibility for Group Accounting. This step would have been taken anyway after the publication of the annual financial statements and has now been brought forward.” The statements made by the chairman of the supervisory board give an idea of the extent to which the supervisory board itself has assumed control and thus responsibility.

“We also understand that you have further questions and in particular would like to know when the audits will be completed.” As the timetable is largely determined by the auditors, Ernst-Moritz Lipp admits that he is currently unable to make any binding statements on this matter. According to Section 111 (6) AktG the members of the supervisory board may not have others perform the tasks incumbent on them.

According to Section 111 (4) AktG the measures to be taken by the management may not be transferred to the supervisory board. However, certain types of business transactions might only be implemented with the supervisory board’s consent. Where the supervisory board refuses to grant such consent, the management board may demand that the general meeting adopt a resolution concerning such consent.

close up of illuminated text against black background

How Sustainable is Tesla’s Bitcoin Investment?


Tesla holds and may acquire digital assets that may be subject to volatile market prices, impairment and unique risks of loss.

“If we hold digital assets and their values decrease relative to our purchase prices, our financial condition may be harmed.” This is the terse statement from the US automotive company on the FORM 10-K to be submitted to the US SEC.

In view of the great attention that Tesla enjoys, the group apparently accepts that thousands of investors are now investing in bitcoin in the hope of participating in the further increases in value of bitcoin. The question arises whether Tesla’s bitcoin investment was made solely to exploit these effects of its market power. Correspondingly, the company’s ratings should be questioned critically. With a stable long-term rating of B2, Tesla, Inc. is already clearly speculative from Moody’s point of view.

In addition to financial aspects, a sustainability rating also includes ethical, ecological and social issues. If one ignores the ecological criticism of Bitcoin, then Tesla’s behavior must now also be viewed critically under ethical and social criteria.

In January 2021, Tesla updated their investment policy to provide them with more flexibility to further diversify and maximize returns on their cash that is not required to maintain adequate operating liquidity. As part of the policy, which was duly approved by the Audit Committee of their Board of Directors, they may invest a portion of such cash in certain alternative reserve assets including digital assets, gold bullion, gold exchange-traded funds and other assets as specified in the future. Thereafter, they invested an aggregate $1.50 billion in bitcoin under this policy and may acquire and hold digital assets from time to time or long-term. Moreover, Tesla expects to begin accepting bitcoin as a form of payment for Tesla products in the near future, subject to applicable laws and initially on a limited basis, which they may or may not liquidate upon receipt.

The prices of digital assets have been in the past and may continue to be highly volatile, including as a result of various associated risks and uncertainties. For example, the prevalence of such assets is a relatively recent trend, and their long-term adoption by investors, consumers and businesses is unpredictable. Moreover, their lack of a physical form, their reliance on technology for their creation, existence and transactional validation and their decentralization may subject their integrity to the threat of malicious attacks and technological obsolescence. Finally, the extent to which securities laws or other regulations apply or may apply in the future to such assets is unclear and may change in the future.

Moreover, digital assets are currently considered indefinite-lived intangible assets under applicable accounting rules, meaning that any decrease in their fair values below Tesla’s carrying values for such assets at any time subsequent to their acquisition will require Tesla to recognize impairment charges, whereas Tesla may make no upward revisions for any market price increases until a sale, which may adversely affect Tesla’s operating results in any period in which such impairment occurs. Moreover, there is no guarantee that future changes in GAAP will not require Tesla to change the way the company accounts for digital assets held by Tesla.

Finally, as intangible assets without centralized issuers or governing bodies, digital assets have been, and may in the future be, subject to security breaches, cyberattacks or other malicious activities, as well as human errors or computer malfunctions that may result in the loss or destruction of private keys needed to access such assets. While Tesla intends to take all reasonable measures to secure any digital assets, if such threats are realized or the measures or controls they create or implement to secure their digital assets fail, it could result in a partial or total misappropriation or loss of their digital assets, and Tesla’s financial condition and operating results may be harmed.

Since digital assets are considered indefinite-lived intangible assets under applicable accounting rules, any decrease in their fair values below Tesla’s carrying values for such assets at any time subsequent to their acquisition will require Tesla to recognize impairment charges, whereas Tesla may make no upward revisions for any market price increases until a sale. “As we currently intend to hold these assets long-term, these charges may negatively impact our profitability in the periods in which such impairments occur even if the overall market values of these assets increase”, writes Tesla on FORM 10-K.

Moreover, Tesla expects to begin accepting bitcoin as a form of payment for their products in the near future, subject to applicable laws and initially on a limited basis, which Tesla may or may not liquidate upon receipt. With these phrasings, Tesla is giving car buyers an incentive to save in Bitcoin on their car and pay for it in Bitcoin. This implies a further, possibly intended, boost for Bitcoin, although experts warn of the lack of technical suitability of Bitcoin as a means of payment transactions.

“We believe our bitcoin holdings are highly liquid. However, digital assets may be subject to volatile market prices, which may be unfavorable at the time when we want or need to liquidate them”, writes Tesla. The high liquidity of Bitcoin is partly caused by barely controllable market segments that hardly know their limits to money laundering. Therefore, there is also an aspect here that must be taken into account in Tesla’s sustainability rating.

Shenzhen – The World Economy of Tomorrow

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You can read it in old German travel guides: Shenzhen was once a fishing village. Shenzhen is not mentioned in the five-volume “Der Neue Brockhaus” from 1975. In 1993, the renowned Brockhaus Encyclopedia reported in 24 volumes under the short keyword “Shenzhen” of only 280,000 inhabitants. Even then it may have irritated readers that the Brockhaus mentions the existence of a 52-story high-rise. In 2017, Shenzhen already had 12.53 million inhabitants. Any German reader looking for answers to the question of what happened there will be happy to encounter the book by Wolfgang Hirn: Shenzhen – Die Weltwirtschaft von morgen (2020 Campus Verlag GmbH, Frankfurt am Main).

Anyone who knows Wolfgang Hirn or his professional background does not have to worry about the technical requirements of the book – it reads evidence-based, detailed and also exciting. Wolfgang Hirn studied economics and political science in Tübingen. After working as a business editor, he worked as a reporter for manager magazin. He has been traveling to China regularly since 1986, published the bestseller “Challenge China” (2005) and most recently at Campus “Chinas Bosse” (2018). He lives as an author in Berlin and writes on topics related to China.

The book not only traces the history of a city that has been the pilot city of the central government for the promotion of electromobility since 2009 and today claims to have more than 200,000 charging stations. With his processing of the fairytale-like rise of Shenzhen to a global model city, Wolfgang Hirn gives the reader an understanding of the following chapters, which deal with “the factory of the world”, the city in the rush of founders and examples of the Tencent and Ping An corporations like them develop their power with alogrithms.

Wolfgang Hirn introduces Shenzhen as a “Smart City”, loaded with electromobility that connects companies, companies that – instead of universities – shape the research landscape and where Nobel Prize winners want to run their research laboratories. However, if you think that “Shenzhen Valley” is all about money, Wolfgang Hirn will open your eyes to the art of building and the architects, artists and designers who create a city.

Finally, Wolfgang Hirn also shows the relationship between the two “difficult neighbors”: How Shenzhen is profiting from the decline of Hong Kong. Anyone who looks at the unprecedented rise of Shenzhen will reconsider whether the “Hong Kong democracy movement” is really about democracy, or perhaps also about a self-confidence that many Hong Kongers have disturbed: “The former British crown colony was bursting with self-confidence,” writes Wolfgang Hirn: Hong Kong looks like a museum today, suddenly looks old.

Who still remembers the “hidden champions” in Germany, German ingenuity? “In 2005, the following five companies worldwide had the most patent applications filed,” writes Wolfgang Hirn: “Philips, Panasonic, Siemens, Nokia and Bosch. So four Europeans – including two Germans – and one Japanese.” Anyone who knows today’s conditions, these words come across as from an old history book with stories from a forgotten time. “In 2018 none of these companies was among the top five. The order is now: Huawei, Mitsubishi Electric, Intel, Qualcomm and ZTE. There was no longer a European, instead two companies from Shenzhen.”

Instead of marveling at the “today” in California, in Silicon Valley, the gaze of politicians, business leaders and journalists who constantly look at extroverted billionaires of the so-called PayPal mafia (Elon Musk etc.) should focus on “tomorrow”, turn east and see the still unknown stars. “The ladies and gentlemen should change direction”, so the appeal of Wolfgang Hirn, who on the one hand was lucky to have seen China’s starting conditions in the 1980s and on the other hand had the foresight to return to China again and again to witness an unprecedented climb.

This rise of China is particularly concretized in the example of the model city, the reform laboratory “Shenzhen”, the city that is closer to Hong Kong than Frankfurt to Wiesbaden, closer than Cologne to Düsseldorf. “Shenzhen still benefits greatly from the fact that the surrounding area has the greatest density of factories in the world. I was able to see with my own eyes how this came about when I traveled to Shenzhen for the first time in the early 1990s,” writes Wolfgang Hirn.

Wolfgang Hirn analyzes the fundamental reforms on which the success was based: In agriculture, in private entrepreneurship, in the free labor market and the abolition of state prices. Against the background of developments in the West, especially in Europe, it becomes clear to the reader in which tragedy Europe and especially Germany is steering: more collectivization of agriculture, private companies on the drip of public contracts and subsidies, in detail state-regulated jobs and tariffs, prices manipulated by monetary and fiscal policy, etc., which lead to where China came from: waste of resources, queues, inefficiency, up to and including insufficient supply.

After Xi Jinping was elected in November 2021, his first eagerly awaited trip took him to Shenzhen to, among other things, visit Tencent and the Qinhai development zone – “without much pomp”, as Wolfgang Hirn reports and quotes the president: “China’s reform and opening-up policy will never stop. In the next 40 years, China will impress the world with further successes,” announced Xi Jinping.

Wolfgang Hirn shows the downsides that went along with the opening. In the shadow of Shenzhen, the megacity of Dongguan emerged “as the Mecca of the global shoe industry”. Dongguan was the filthy kid in the Pearl River Delta, a city that once had a bad reputation. “It was the capital of prostitution,” said Leslie C. Chang from her book “Factory Girls”. The China expert Wolfgang Hirn succeeds in showing the different phases of development and differentiated how the rise of China and especially of Shenzhen was not just characterized by good news, but rather the removal of grievances in one area was bought at the price of grievances in another. Unfortunately, the German state media often do not differentiate which grievances in China have been overcome, which have been added and which have been added but have already been overcome again. Anyone who reads Wolfgang Hirn book carefully will be able to form his own, more informed opinion.

The author succeeds in repeatedly speaking on two sides of the same thing, for example in the case of drones and the leading manufacturer in Shenzhen: “DJI estimates that a third of China’s agricultural area could be cultivated with drones. In XAircraft from nearby Guangzhou, founded by the former Microsoft manager Peng Bin, DJI has a serious competitor in this segment.” Wolfgang Hirn adds another use of drones that is still unimaginable for German readers: “And another important application area for drones was discovered in Shenzhen. The traffic police there have been using drones since 2016 to track down traffic offenders of all kinds – from high-speed drivers to parking offenders – from above. Obviously with success: every three minutes they would register irregular behavior with their drones, reports the police.”

“We will have to remember a new abbreviation. Three letters that will play an important role in the future: GBA “, writes Wolfgang Hirn and foresees a new center of power in the world: “Greater Bay Area.” It is about the merger of the two special administrative areas and former colonies of Hong Kong and Macau with nine cities in Guangdong Province.

Anyone who does not deal with Wolfgang Hirn‘s point of view will hardly understand ratings for countries, industries, cities and companies in the future. “The emerging countries, including the rest of China, see how growth can be accelerated through a clever industrial policy. And developed and even well-developed industrialized countries like Germany see how to promote high-tech industries, how to create an entrepreneurial spirit in a city, and how to pursue a consistent transport policy. “