Some sommeliers say that German wines are the perfect accompaniment for spicy Chinese food, with the sweetness of a Mosel Riesling providing just the right foil to hotter dishes from provinces such as Sichuan.
But will the airports of the Mosel Valley prove just as complementary to the taste of Chinese investors? Jiemian.com reports Chinese firms have turned their attention to aviation hubs in the wake of growing tourist traffic to Germany. “Imagine you have a great shopping mall and relatively affluent customers all heading off to visit their families and friends, wallets at the ready,” it asks. “No wonder there’s new investment pouring into airports.”
Part of the logic? Buy a conveniently located airport and turn it into a duty-free shopping hub for Chinese travellers on their way home from Europe. So far Chinese investors have purchased two regional airports and a third deal is being dished up, with Chinese groups bidding for Frankfurt-Hahn airport, the gateway to the Mosel valley. According to German newspaper Handelsblatt, there are two Chinese consortiums bidding for the airport, the fifth biggest for cargo in Germany and situated 110km southwest of Frankfurt. One is led by the Henan Civil Aviation Department, which has had cargo links to Frankfurt-Hahn from Zhengzhou airport since 2013. The other is e-commerce giant JD.com. German website Airlines.de says that Hainan-based HNA Group is also interested in making an offer.
The potential bidding war is delighting the airport’s current owners (the State of Rheinland-Palatinate, which owns 82.5%, and the State of Hesse-Darmstadt, with the remaining 17.5%). Joachim Mertes, president of Rheinland’s state parliament, or landtag, says he would be very happy to welcome the Chinese. “Money has no nationality and the Chinese are a people of great discretion,” he suggests. “The world’s second largest economy isn’t short of capital.”
The airport bosses certainly need the Chinese cash, because Frankfurt-Hahn has been losing money for years. Its former owner Fraport sold a majority stake to the local government in February 2009 for just one euro after failing to turn a profit and the state governments have not had better luck since then. In 2014, the airport reported a loss of €45.2 million ($50 million) and sold off land to meet the shortfall. In 2015 it still lost €16 million, largely because two of its main cargo operators, Air China Cargo and Yangtze River Express (a subsidiary of HNA’s Hainan Airlines) switched to Frankfurt and Munich airports respectively.
One of the obstacles to profitability is the federal government’s aviation tax, which has made Germany’s regional airports less competitive than their rivals in neighbouring Holland and Belgium. The government introduced the tax in 2011 as part of its plan to reduce carbon emissions, charging travellers leaving Germany €7.5 for short-haul flights, €23.43 for medium-haul and €42.18 for long-haul. It nets the government about €1 billion a year, but industry participants have demanded its removal. This week the International Air Transport Association (IATA) renewed calls to scrap it.
Frankfurt-Hahn saw passenger numbers slip from 2.79 million to 2.45 million in 2014, although the trend reversed itself in 2015 when the number rose back to 2.7 million. The Chinese press believes the airport can do much better if it develops more routes from China.
But the precedents are not very auspicious. In July 2014, the PuRen Group owned by entrepreneur Chen Yongqiang bought Lubeck airport in Schleswig Holstein. Chen said he wanted to make the airport a hub for his new start-up airline and set up a school to train Chinese pilots. He purchased the airport from an Egyptian businessman who had been forced to file for bankruptcy. A year later, PuRen was forced to do the same.
Likewise in 2007 Beijing-based LinkGlobal paid €30 million for Schwerin-Parchim airport in sparsely populated Mecklenburg-Western Pomerania. Its strategy was to set up a business park helping Chinese companies to stamp local goods with the ‘made in Germany’ label and then airfreight them back to China.
But the plan hasn’t gone so well. On its website the company’s motto is to ‘grow together and enjoy the birds singing’. That’s just as well – as the German newspapers say birdsong has been the loudest sound heard to emanate from the airport ever since.
© ChinTell Ltd. All rights reserved.
Sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.