Europe’s Moment of Truth

On June 29, 2026, the Honeywell I spent much of my career building ceased to exist.

Not in failure. In a way, the opposite. That day the company finished splitting itself into three independent, publicly traded companies: Honeywell Technologies, Honeywell Aerospace, and Solstice Advanced Materials. A 138-year-old industrial giant, taken apart into focused pieces. The chairman called it a defining moment in Honeywell’s legacy. He was right. It was also, for those of us who gave that company decades, the quiet end of an era. And when something you helped build comes to a close, you catch yourself looking back at what it tried to teach you.

So let me use the moment for something better than nostalgia. Because Europe is having the wrong argument about China. And I learned why inside the very company that has just been taken apart.

The debate in Berlin, Paris, and Brussels runs on subsidies, dumping, overcapacity, stolen intellectual property, tariffs. All of it real. None of it the heart of the matter. Over twenty years at Honeywell I built and ran businesses across China, India, the rest of Asia, the Middle East, Africa, Eastern Europe, and Latin America. From every one of those seats I watched the same thing happen. European firms, our own units among them, ran into the Chinese competitor, industry after industry. And this was never only about winning inside China. It was about staying competitive anywhere, in a world where the Chinese company had become the most in-your-face, most relentless rival on the board. The outcome almost never turned on trade policy. It turned on attitude.

I want to tell three stories from those years. Three Honeywell businesses, three industries, three completely different answers to the same threat. Two ended in defeat. One of them total, one of them slow and expensive. The third became a category leader in one of the most brutal markets on earth. Here is the part that still keeps me up: all three had the same choice in front of them. The thing that decided their fate was sitting there for any of them to pick up. Most of them wouldn’t touch it.

I’ll leave the individuals unnamed. This is not a settling of scores, and good people got caught in each of these stories, me included. But I will name the company, because Honeywell was my home for most of my working life, and because there is no better week to draw these lessons than the one in which the old company finally became three. The attitudes that decided these cases are the same ones deciding Europe’s industrial future right now. And Europe is running low on time to pick the right one.

It helps to remember how commanding Europe’s position in China used to be. For two decades, the European champions did not merely compete there. They ruled. Volkswagen, BMW, Mercedes, Porsche. Bosch, Schneider, ABB, BASF, Siemens. These were not bit players hanging on by their fingernails. For several of them, China became the single biggest market they had anywhere in the world. Volkswagen sold more cars in China than in Germany. So did BMW. Porsche’s Chinese buyers were younger and more plentiful than its German ones. The whole German industrial machine looked untouchable, and a fat slice of its profit came off Chinese roads and out of Chinese factories.

Then the ground moved, and they kept standing still. China went electric faster than any market in history, and the champions were slow. Painfully slow. They kept shipping the petrol cars that had made them rich while local Chinese companies built better electric ones: better software, lower prices, tuned to exactly what Chinese buyers wanted. In a handful of years an enviable dominance started to crumble. The European brands that once owned the Chinese premium market now watch their share bleed to rivals that barely existed ten years ago.

And here is the part that should be ruining sleep in Stuttgart and Wolfsburg. Those same Chinese companies are now at the gate in Europe. The competitor that pushed Volkswagen and BMW aside at home is loading cars onto ships bound for Hamburg and Zeebrugge. The threat is no longer over there. It has a European address. Which is exactly why attitude, the thing that governs the response, matters more than any tariff. And why three old Honeywell stories are worth your time.

The first business was ours: airport runway and taxiway lighting. Not bulbs. Systems. This was our early attempt at it and has little resemblance to what Honeywell provides in the market today. Progressive guided taxiing, integrated control, the whole choreography of light that walks an aircraft from runway to gate. It was run out of Germany, and it was European engineering at full stretch. Over-built, feature-rich, genuinely brilliant. Nothing left to chance. Picture the most complete, most technically flawless system in its category, and you have it.

It was so advanced we could barely find anyone to sell it to in Emerging Markets. That is not a joke. The system was simply too much for most airports. To land a launch customer we needed one that was busy, run by highly technical people obsessed with throughput, and willing to pay a fat premium for German quality. Even many European airports found it over the top at the time. We finally landed a pilot at a big new airport in Asia.

The install was brutally complicated. It worked, but only with senior German engineers living on site to nurse it. It cost far more than promised. It ran well past the point where the customer’s patience had quietly left the building. And our engineers were delighted. In their eyes this was perfection. It was also wildly expensive, hard to install, hard to use, and nearly impossible to maintain. Best of all, the German team guarded the know-how so jealously that no local person ever learned how the thing actually worked. Job security, I suppose.

Then we ran the market study. Over the next twenty years, the great wave of new airports would break over Asia. China first, by a mile, then India, then Southeast Asia. The prize was enormous. But the buyers wanted something different: simpler systems, fitted to local conditions, in local languages, easy to run, at a price a normal airport could actually pay. They also wanted us to fill product gaps that we found not attractive enough to build.

Our German team rejected every word of it. Compromise the engineering? Unthinkable. Why would anyone want a simpler system? Why train local Chinese or Indian engineers who couldn’t possibly grasp the domain? These were not really questions. They were expressions of disbelief that the world could be so foolish.

Meanwhile, local Chinese firms were quietly building their own low-end systems and improving them, year after year. We collected the evidence and carried it to the German team. We got a pat on the head. These competitors, we were told, could not be taken seriously.

So we bid on Chinese airports. We lost just about every one. A local competitor won a major airport in the north. Our team waved it off: they will fail. They did not fail. They got better. Steadily, stubbornly, the local firms closed the quality gap, at a fraction of our price. Our own order book stayed close to empty. The Chinese customers actually liked our system. They just wanted it adapted and made affordable. We would not listen.

By the time we had lost nearly every bid, the German team was finally dragged into localizing. In India, on the theory that the intellectual property would be safer there. But the pace was glacial and the dependence on Germany near total. We missed the moment completely. The Chinese competitors became excellent. Their products matched ours, carried the features customers actually wanted, at a price those customers could afford and maintain. In the end we could not capture the market upside. Fast forward to today, Honeywell does have a strong offering but majority of its participation is in traditional mature markets. The local Chinese firms went on to win almost every airport in China, then started winning them around the world.

The lesson. We were not beaten by a better competitor. We were beaten by our own blindness, and our refusal to believe a Chinese firm could ever build something worth buying. We fell in love with the product we wanted to make instead of the customer we needed to serve. And we hoarded our own knowledge so tightly that when we finally tried to localize, we had already made it impossible. Perfection was not the trophy. It was the trap.

The second business came to Honeywell by acquisition. We had bought a French company in personal protective equipment: safety gear, protective footwear, the kit that keeps working people alive. The idea was to build a broad protection portfolio on top of good macro tailwinds and, supposedly, some clever material technology. Even then, I thought the technology story was thin. This was not really a technology business. It lived and died on brand and channel.

Soon after the deal, we looked at the China operation. What we found stopped me cold. The whole China business was thirty-five million dollars in revenue. And it carried seven French expatriates in Shanghai. Seven. For comparison, Honeywell’s deeply technical, multi-industry business in China was doing one and a half billion dollars, and carried less than ten expats, mostly subject matter experts in the genuinely technical jobs.

The cost of those seven was eye-watering, and the business was losing money. Now, this was about as local a business as you can find. It sold to police forces, fire brigades, local builders. It ran on local knowledge, local language, local relationships. What it did not run on was a troupe of expensive expatriates who had, by this point, perfected their wine tasting at the smart addresses along the Bund and their golf swing at the best clubs in the city. I will say this for them: their handicaps were excellent.

The problem was not subtle. I sat down with our China leader and we ran a review. We did not need any of the expatriates. We needed hungry local people who knew how to build a brand and a channel on the ground. So we sent the expatriates home.

The resistance was something to behold. I will not pretend it made me popular. The acquired company’s management never quite forgave me, and it colored their view of China, and of me, for years. But we did it. And the China business turned profitable and grew several times over.

The deeper sickness never really lifted, though. The entitlement in that business was chronic. It was proud of its brand, its heritage, its way of doing things, and that pride made it deaf to the markets that were actually growing. Across the emerging world it struggled to sell much beyond the comfortable accounts, the big multinationals who already knew the name. The hunger to go win a fire department in a second-tier Chinese city, or a builder in Indonesia, simply was not there.

Plenty of things eventually weighed on that business, including the collapse in protective-equipment demand once the pandemic faded. I am not going to force the whole outcome through one lens. But the numbers speak plainly enough. We assembled the broader portfolio for close to three billion dollars. We sold it, years later, for a little over half of that. And the chronic condition, the entitlement, the pride in a brand and a model the market was quietly walking away from, capped that business for as long as I watched it.

The lesson. The first business was blind to the product the market wanted. This one was blind to the market itself, and to the people in it. Entitlement is its own species of failure. It is being so pleased with what you are that you cannot see what the customer needs, cannot respect the local knowledge you lack, and cannot summon the hunger to go win the business sitting right in front of you. Brand and heritage are assets, right up to the moment they become an excuse.

The third business was Honeywell’s turbocharger unit. Established, technically excellent, and under siege. Turbochargers in China were one of the most savage markets I have ever seen. Dozens upon dozens of local competitors, many of them straight copies of our designs, all of them cheaper. Our business was proud, capable, and slowly sinking. On paper it looked like the runway-lighting story cued up to run again.

It did not run again. And the whole reason was the attitude of the people at the top.

The business was run by Europeans. A French CEO, a European leadership team, the very same profile that had presided over the other two defeats. But this group did something rare. They got humble. They assumed the local competitor had something to teach them. I worked closely with them, and one of the more useful things I ever did was simple. I brought them to China early and made them look. Not the glass towers of Shanghai and Beijing. The tier-two and tier-three cities, where the real market was growing and the real competitors were being forged in the fire. I made them see it with their own eyes.

And they saw. They studied the copycats seriously, not to sneer but to understand why they kept winning. The Spanish marketing leader eventually packed up and moved to Shanghai himself, to run the local strategy on the ground and keep it wired back to headquarters so the thread never snapped. A small thing with a large meaning: someone senior chose to go live inside the problem instead of managing it from a time zone away. Then they made the choice the other two businesses could never stomach. They set out to become the Chinese competitor, rather than to beat the Chinese competitor as a foreign company standing outside the glass.

In practice that meant real local design authority. Not a sales office taking orders from home, but the power to design, adapt, and price for the local market, held in local hands. It meant matching the local cost and the local speed instead of demanding the customer pay for features nobody asked for. It meant treating the flood of local rivals as a signal to read rather than an insult to dismiss. When the first answer from a customer was no, they did not pack up. They kept going.

The result was not survival. It was leadership. The business climbed to the top of one of the most competitive categories in the world, in the hardest market in the world, winning the lion’s share of the platforms it chased. The copycats did not run us out of town. We beat them on their own street, at their own game, and a good many of them faded away. Same threat the runway-lighting business faced. Opposite attitude. Opposite ending.

The lesson. The cure for the Chinese competitor was not better technology, and it was not a wall. It was humility, hunger, and the nerve to become the local player instead of remaining the foreign one. Everything the first two businesses refused to do, this one did on purpose. And it worked, spectacularly.

Line the three up and the pattern is impossible to miss. Same competitor. Same playbook coming at them: local, cheaper, fast, good enough and getting better by the quarter. Three European responses. Three fates.

The first business worshipped its product and could not imagine simplifying it. The second worshipped its brand and could not be bothered to learn the market. The third worshipped nothing. It stayed curious, humble, and hungry, and it won. The deciding factor was never the technology, the price, or even the subsidies flowing to the other side. It was how the Europeans chose to see the local reality in front of them.

This matters now because Europe is about to sit this exam not one business at a time, but across its whole industrial base at once. Electric vehicles. Batteries. Solar. Telecom gear. Increasingly, high-speed rail, machinery, medical devices, and the industrial software running underneath all of it. The Chinese competitor is showing up everywhere the first two businesses swore it never could, with products that are no longer cheap knockoffs but genuinely good, often better matched to what customers want, at prices European cost structures cannot touch. Europe is staring at an investment gap counted in the hundreds of billions of euros a year, and a competitiveness debate that keeps wandering back to walls.

Walls have their uses. They buy time. But the two businesses that failed did not fail for lack of protection. They failed because, handed time, they spent it defending the very thing that was killing them. That is the real danger for Europe. Protection without transformation just postpones the reckoning and fattens the bill when it lands.

The three cases point to one attitude, and it can be spelled out. Respect the competitor enough to study it hard, especially when it is smaller and cheaper than you. Fall in love with the customer, not the product. Simplify. Rip out the features your engineers adore and your customers will not pay for. Push real authority down to the local market, the design, the pricing, the decisions, instead of clutching it at headquarters where it feels safe. And carry an ambition bigger than defending your patch: aim to become the local competitor, on its own ground, at its own game.

I have to be honest about the clock, though, because it is later than it was when I lived these stories nearly twenty years ago. For a lot of European companies, the chance to become the Chinese competitor inside China may already be gone. The window the turbocharger business climbed through has narrowed, and in some sectors it has shut. That does not retire the lesson. It changes what the lesson asks of you.

If you did build genuine local strength in China, if you grew the DNA, the humility, the local muscle, then the job now is to bring that hard-won capability home and turn it on the same Chinese firms as they come ashore in Europe. Your China years become your weapon on European ground. If you did not, if you spent the good years polishing the citadel, the options get harder. You may have to partner with Chinese companies rather than pretend you can still beat them alone. Joint ventures, licensing, supply deals, learning arrangements that would have made the proud businesses of a decade ago choke on their coffee. Not every European boardroom will find that easy to swallow. Swallowing it will be its own moment of truth.

What is not on the menu, what was never on the menu, is the answer my first two businesses gave. Dismiss the competitor. Wish it away. Trust that superior European quality will reassert itself in the end, as if by natural law. It will not. That road has been walked all the way to its end.

Here is what I keep coming back to. The company that taught me all of this became three companies on June 29. The turbocharger business, the one that learned to become the competitor, had already left home years earlier, spun out to stand on its own two feet. The student graduated. The perfectionist and the aristocrat did not. Overall, at Honeywell we had many more success stories than failures. In fact we were the pioneers of globalization through our “east for east” and “becoming the Chinese competitor” strategies. Yet there are good lessons to be learned from the odd failures.

I do not think that is a coincidence. The businesses that listen, adapt, and go truly local tend to outlast the ones that fall in love with their own reflection. My German engineers built a system of breathtaking perfection and could not sell it. My French colleagues built a fortress of brand and pedigree and could not defend it. My turbocharger team challenged everything and built fresh new products that the customers wanted at attractive prices. And they did that while being fabulously profitable. They just showed up in the tier-three cities, kept their eyes open, and refused to be too proud to learn. They achieved our mantra of doing two seemingly competing things at the same time.

Europe can build anything. It always could. The question was never capability. The question is whether it can let go of the pride that mistakes excellence for entitlement, and do the humbler, harder, less flattering thing that actually wins. Two of my three businesses could not manage it. One of them could. Europe gets to choose which story it repeats.

I would choose quickly. The ships have already left the harbor, and they are not carrying wine.

Shane Tedjarati spent more than two decades at Honeywell, including as President of Honeywell China, which he grew into the company’s second-largest country operation, and later leading its high-growth regions across Asia, the Middle East, Africa, Eastern Europe, and Latin America. He is Founder and CEO of Tribridge Group and a Visiting Scholar at UC Berkeley. This essay is a companion to his earlier pieces, “The Reckoning” and “The Race That Isn’t.”