According to the VDMA, digital protectionism has become increasingly important in recent years. Digital market foreclosure has become a major threat to the free movement of data. However, the success of the German mechanical and plant engineering industry is increasingly dependent on globally available and reliable digital business models. These are dependent on the unhindered, secure flow of data.

The new study by the VDMA's Impuls Foundation - prepared by Bird & Bird LLP - is the first to show the worrying to serious effects of protectionism on Industry 4.0 and digitalization in mechanical and plant engineering. The study examined the free flow of data with a focus on the EU, USA, Russia and China. One result of the study is that companies are feeling the effects of protectionist measures both in the global sales markets for their machines and in the domestic EU market. High costs for local data storage, local inspection regulations and concerns about the disclosure of trade secrets make market access more difficult for small and medium-sized companies in particular. Companies are therefore required to deal with an asymmetrical regulatory environment. Against this backdrop, the VDMA is calling for politicians at a national and EU level to dismantle barriers to the free flow of data and avoid them in future - on their own doorstep and on a global scale.

Below are the key findings of the study by region:

EU - Data protection for machines?

Digital business models associated with Industry 4.0 are also under the "watchful eye" of European data protection law. The broad scope of application of the General Data Protection Regulation leads to considerable, sometimes excessive requirements for documentation and information obligations when processing machine data; at the same time, there is a lack of sufficient facilitation for processing pseudonymous data. This applies in particular to data from the interaction between humans and machines (HMI data).

China - protective wall against the free flow of data

With its cyber legislation (Cyber Security Law), China is developing a dense set of regulations with a significant impact on the free exchange of machine data. It affects all companies that place digitally networked products on the Chinese market. In view of the great importance of the Chinese market for industry, there is a great need for political dialog. The aim here must be to enable new digital business models in mechanical and plant engineering through a free and secure flow of data from China to the EU.

Russia - National isolation versus data flow

In Russia, the requirements for localization of personal data of Russian citizens can be a significant restriction. The same applies to requirements for the use of local internet nodes. As in China, a high local implementation effort for digital services (e.g. cloud services) is to be expected. Companies need a clear strategy on how to deal with these (local) restrictions and adapt their business models accordingly.

USA - Trade sanctions lead to additional costs

In principle, there are no significant regulatory restrictions in the USA that have a direct impact on digitization projects in the industry. However, export control regulations and trade sanctions can have an indirect impact on cross-border data exchange - for example, if encryption technologies originate from the USA and are also to be used in the target markets of Russia and China. Additional development costs for technological alternatives can often only be borne by large companies.

Cybersecurity under cover

In addition, there are increasing regulations in the area of cyber security, which are primarily aimed at protecting so-called "critical infrastructures". These can apply incidentally - insofar as the supply relationship exists with a critical infrastructure operator - or directly to mechanical and plant engineering. In China, machinery and plant manufacturers can already be considered network operators under the existing legal situation and be affected by the associated high regulatory requirements. A free flow of machine data to Europe hardly seems feasible here.

The full study with detailed results is available at www.impuls-stiftung.de