© ‘Industrie 4.0’: Will German Technology Help China Catch Up with the West? Road map for tomorrow’s industry. Germany is China’s preferred partner. Intensified co-operation coupled with great risks. by Jost Wübbeke and Björn Conrad MAIN FINDINGS AND CONCLUSIONS  First we saw the advent of the steam engine, then the assembly line, followed by industrial robots. Now, intelligent manufacturing is heralding the beginning of the fourth industrial revolution. The rise and fall of enterprises and entire national economies will hinge on making ‘intelligent factories’ a reality.  China is absolutely determined to jump on this bandwagon. There is no time to spare: increases in wages portend the end of the low-wage era. China wants to utilise digitisation to enhance efficiency and quality and to draw level with leading industrialised nations.  Germany is China’s preferred partner: the German concept of ‘Industrie 4.0’ serves as a guideline for the Chinese government. Germany has the advanced technology needed for ‘Industrie 4.0’. Demand from China offers German sellers unique sales opportunities. The time window is limited, though, as Ger- man firms are likely to be edged out as soon as Chinese companies close the technology gap.  Germany’s co-operation with China will strengthen Chinese competitors. In general, it will take decades for China to draw up with Germany. However, sev- eral large Chinese corporations (Sany, Haier, etc.) will jump forward with the aid of ‘Industrie 4.0’. Chinese industry will quickly become digitised in any event – if not with German assistance, then with products made by other international competitors.  The greatest danger to co-operation with China is the loss of sensitive data in China. State data control and its use as an instrument of protectionist in- dustrial policy are destroying the foundation for working together. Under such circumstances, exchanging data with Chinese partners and suppliers is vir- tually unthinkable.  Data security in China cannot be universally guaranteed. Specific co-operation between Chinese and German companies may offer a way out. Together, the partners would need to find a way for protecting their joint technological advances towards the outside while fairly sharing the associated returns on the inside. Ger- man companies must define clear terms and conditions for these partner- ships.  German market leaders (SAP, Siemens) should first test the market. They have the capacity to monitor risks more closely than smaller companies. On the other hand, for medium-sized companies experiencing problems in protecting their technology, the loss of know-how can quickly become a threat to their very survival.  Co-operative pilot projects will shed light on the opportunities and limits imposed by in-depth co-operation and reveal starting points for political support. This should serve as the basis for a co-ordinated strategy pursued by both Ger- man politics and industry.