German firms boost presence in China
"German products stand for quality and innovation, and this reputation is achieved by an integrated network of enterprises, universities, and research institutes on one hand and highly developed CSR (corporate social responsibility) within the companies in Germany on the other hand. German companies introduce these achievements to the Chinese market and to their demanding consumers," said Jutta Ludwig, executive director of the Beijing Committee of the German Chamber of Commerce in China.
"Not 'Made in China,' but 'Innovated in China' will be the challenge for the Chinese economy and German companies in China stand ready to partner. Regarding 'quality and social responsibility' not only big companies, but also medium-sized German companies in China are dedicated to the same philosophy they have in Germany," Ludwig pointed out. This is evidenced by a survey on CSR recently conducted by the German Chamber.
Germany assumed the presidency of the European Union for the 12th time earlier this year. Aiming to seek greater involvement in the Chinese market, European embassies have launched a project called "We are Chinese companies too," which has attracted widespread attention in China.
"The key element of the initiative is the positive presence and achievements of European companies in China with very high levels of employment provided and significant contributions to Chinese nationals' skills and income," Ludwig said. To date, some 3,300 German companies have set up operations in China and less than 5 percent of their employees are German. More and more Chinese employees are influencing decision-making in German companies.
Germany is China's biggest European trade partner, and China is Germany's biggest trade partner in Asia. Last year, bilateral trade hit $78 billion, a rise of 23.6 percent year-on-year. Germany is also the biggest European investor in China.
Last year, German capital worth $1.98 billion was injected in China, a rise of 29.3 percent over the previous year, bringing the country's total FDI in China to $13.8 billion. But, most German companies do not invest in China for export, but to serve the Chinese market itself.
Immense opportunities
German companies believe that they have the right products and solutions to seize the enormous opportunities and possibilities the Chinese market offers.
In the next five years, about 300 million Chinese rural residents are expected to move to urban areas, "To tackle the environmental and social challenges of this migration there is a huge need for advanced urban planning, energy saving through eco-efficient buildings and traffic solutions, emissions reduction, and efficient use of resources.
A major advantage enjoyed by German firms lies in their strong research and development (R&D) capacities. Some 30 percent of company budgets in medium-sized German companies are devoted to R&D, and their ties to universities and research institutes are the driving force of innovation.
In environmental protection, which is an important area for bilateral business, the Clean Development Mechanism (CDM) under the Kyoto Protocol has inspired an upswing in close collaboration between the two nations.
Under the Chamber's initiative, German delegates from 60 relevant companies came to China last December to showcase their technologies on renewable energy to local entrepreneurs and governments and vied to forge partnerships with them. The German Chamber has identified 60 cooperation projects and is continuing to hold workshops this year to push German-Chinese cooperation.
Higher expectations
Ludwig said the improvement of China's investment climate has been significant, especially during the past five years. But she expressed hopes that China will make more progress in the sphere of transparent government procurements and intellectual property rights (IPR) protection.
China promised to sign the agreement on transparent government procurement before entering the WTO. "If China could sign the agreement in the near future it would increase the quality of government procurement," she said.
Ludwig also suggested Chinese enterprises learn from the experiences of German companies regarding IPR protection. Only if the intellectual property of Chinese companies is protected, will they be competitive in China and also in the global market.
In view of the fact that Germany's investment in China far outstrips China's investment in Germany, Ludwig says Germany's medium-sized enterprises - which contribute over 70 percent of the country's employment and nearly 50 percent of gross domestic product, can provide good examples for their Chinese counterparts to follow, like flexible and quick decision-making, and she notes that cooperation with them will pave the way for increased investments by Chinese companies in Germany.
Trade promotion
The executive director also said that in Beijing alone, the German Chamber of Commerce in China hosted some 90 events to boost German-Chinese cooperation and trade last year. It will organize a series of events to promote Sino-German business cooperation in the health care, transportation and energy sectors this year.
For the seventh time, the German Chamber organized a high ranking conference in Germany, this year in Stuttgart. Representatives of 13 German companies that have established their business in China and seven German firms that have Chinese partners went to Stuttgart, where they met some 200 CEOs and senior business executives in charge of foreign cooperation.
The German firms with Chinese operations shared their success stories in the country, and offered advice to help the others avoid any pitfalls or risks while considering investing in China.
The Chamber is also focusing on encouraging more Chinese enterprises to invest in Germany.
(China Daily 05/24/2007 page26)
