Alibaba Partners With Siemens as China, Germany Vow to Keep Trade Free
Among several Sino-German deals worth 20 billion euros signed Monday in Berlin was a contract between Siemens and Alibaba Cloud to bring an industrial software suite to China.
Germany's Siemens AG announced its plans to deliver its digital operating system, MindSphere, to China, in collaboration with the e-commerce titan, Alibaba Group Holding Ltd. (NYSE: BABA), as leaders of the two countries reiterated commitments to keep trade free at a conference in Berlin on Monday.
Siemens said it is planning to launch MindSphere in China in 2019 through Alibaba Cloud, Alibaba's cloud computing arm.
The deal struck between Siemens and Alibaba was among several Sino-German partnerships arranged today and witnessed by German Chancellor Angela Merkel and Chinese Premier Keqiang Li. Other companies involved included Germany's BMW and Volkswagen, and China's Contemporary Amperex Technology Co. Ltd. Overall, some 20 billion euros ($23.51 billion) worth of contracts were arranged.
In a statement today, Siemens said, "The two companies will leverage each other's technology and industry resources to build a unique IoT solution to support Industrie 4.0, China's manufacturing upgrade and transformation and other industrial Internet initiatives."
"Industrie 4.0" refers to Germany's initiative to digitize manufacturing and improve productivity, similar to Beijing's "Made in China 2025" plan to boost the country's high-tech developments.
Using MindSphere, companies can connect products, plants, and equipment to the Internet and enable communication, analysis, and digital services through the so-called Internet of Things (IoT), Siemens said in its product description.
In the industrial sector, MindSphere collects data from machines to predict problems with equipment and reduce downtime, boosting productivity. For example, the software can shut down a factory machine which has neared overheating, the company said. MindSphere is currently available only via Amazon Web Services and Microsoft Azure.
Simon Hu, president of Alibaba Cloud, called the deal with Siemens "an exciting step towards Alibaba Cloud's goal to enable digital transformation across the globe."
Alibaba Cloud has played a major role in helping companies like Siemens and SAP SE (NYSE: SAP), a German-based European multinational software corporation, enter the China market, in which some software providers from outside have struggled.
The president and chief executive officer of Siemens, Joe Kaeser, said, "This cooperation is a landmark deal for bringing Industrie 4.0-solutions to China as the world's powerhouse of manufacturing."
Gaining market share in China, the world's largest manufacturer, would help MindSphere compete against a similar platform, Predix, developed by General Electric Co. (NYSE: GE).
Alibaba dominates cloud computing in China, well ahead of its competitors. According to the International Data Corp., Alibaba Cloud accounted for 47.6 percent of China's public cloud market in the first half of 2017.
The announcement of a partnership with the largest industrial manufacturing company in Europe sent Alibaba's stock up 48 cents to $192.75 per American depositary share in New York on Monday.
China closed the deal with EU's largest economy as it entered a full-blown tariff war with Washington on Friday, with 25 percent tariffs imposed by both sides on $34 billion worth of each other's goods.
Speaking at a conference alongside Chancellor Merkel, China's Premier Li stressed the need to fight protectionism, saying China needed a stable and peaceful framework so it could develop further, and that was only possible with free trade: "We are against unilateralism - we are in favor of free trade."
Merkel said she hoped a Sino-European summit on July 16-17 would bring about progress on protecting investments and added: "I also hope that Germany and China can make a contribution towards ensuring that the world does not end up blundering into a spiral of trade conflicts."
(Reuters contributed to this article)