German companies in China are pessimistic about the future. More than half of the companies expect the industry to develop “the same or worse” this year. Data from the German Chamber of Commerce shows this.
Confidence in the upturn appears to be different: According to a recent survey by the German Chamber of Commerce in China (AHK), more than half of German companies in China believe their own business prospects are the same or worse than in recent times.
China remains an important market and growth driver for many companies, said chamber chairman Hubertus Troska. Still: “The economic recovery has not progressed as quickly as expected. Companies are citing growth conditions in the market on the one hand and geopolitical tensions on the other, making it harder to do business,” Troska said.
In other words, the 4.5% growth rate of the Chinese economy in the first quarter has surpassed that of German companies in China. On the one hand, because it does not necessarily take place in regions where German companies are well represented. On the other hand, because there are a lot of unanswered questions in the business right now.
“There are so many industries in China that are so strong,” Troska said. “Every entrepreneur asks himself: Will this continue, will we gradually grow or will the market even shrink?” The question also includes: How easy or difficult is it to do business? Will the regulatory framework become easier or more difficult? How many domestic or international regulations affect business life?
Companies looking to significantly reduce investment
Some people have found the answer for themselves. A growing number of German companies in China believe their profits will be significantly reduced this year – almost a third of the 288 companies surveyed. They also want to invest much less than they did before the pandemic.
In order to change this situation, despite all the difficulties in German-Chinese relations, a delegation from the German Chamber of Commerce and Industry recently visited China. Among other things, she also spoke with representatives of China’s Ministry of Economic Affairs and the Ministry of Foreign Affairs. The main problem: regaining trust three years after the Corona visitation ban.
DIHK Chairman Peter Adrian said: “The Federal Chancellor has made it clear that China plays a decisive role as Germany’s political and economic region – and should continue to do so.”
government consultation in berlin
In less than two weeks, the German-Chinese government consultations will be held in Berlin. Even if diplomats say the event should be on a smaller scale than in the past: the German economy has high hopes for it. This is not the first time that topics such as legal certainty and clear rules for German companies in China will be discussed.
Then there’s the China strategy that the federal government is developing. Knowing in advance that companies should disclose more about their operations in China, the Traffic Light Alliance wants stricter investment rules and less state protection.
Adrian believes that past economic success will help influence the political future: “The well-known companies that have been involved in China for many years have made it clear that they want to continue and expand this commitment. I believe this fact will be discussed after the necessary process , will also flow into the German government’s China strategy,” Adrian said.
After the talks in the capital Beijing, the DIHK delegation will also visit the economic centers of Shenzhen and Hong Kong.