Despite the German government's repeated calls for companies to reduce their reliance on China, the reality is the opposite.

According to the latest business environment report released by the German Chamber of Commerce, German companies in China are maintaining their competitiveness by deepening cooperation with local Chinese enterprises.

German companies in China are deepening their partnerships with local partners. Image: IMAGO/VCG

The report states that German companies hope through this collaboration, not only to survive in this increasingly competitive market, but also to benefit from the global expansion wave of Chinese companies.

Compared to last year, German companies are more optimistic about their business prospects this year and next year. This confidence has seen a significant recovery after recently falling to its lowest point since 2018.

Martin Hoffmann, chairman of the German Chamber of Commerce in China, said that while this may not be a fundamental turning point, companies do expect the Chinese government to take measures to curb destructive price wars currently taking place in the market.

Official data shows that despite China's slowing economic growth (4.8% in the third quarter), 31% of German companies in China expect the economy to improve next year, while 23% remain pessimistic.

Given the unstable effects of the government's anti-deflation measures and recent fluctuations in industrial profits, the improvement in German company confidence stands out significantly.

More importantly, the vast majority (93%) of surveyed companies clearly stated they would not leave China, with over half (53%) planning to increase investments in China, a proportion that has even risen compared to last year.

New Investment Trends: Not Just Production, But Localization of R&D

Companies planning to invest more are focusing on increasing the "localization" of their operations. Hoffmann refers to this as the "third wave of localization."

Previously, it was "made in China, for China," but now, research and development work is being shifted to China to respond more quickly to local customer needs and to enhance competitiveness in public tenders in the Chinese market - a long-standing complaint of foreign companies who feel at a disadvantage in such tenders.

Changing Perceptions: Chinese Competitors Seen as Innovation Leaders

German companies' perceptions of their Chinese competitors are also undergoing a profound change.

As many as 60% of the surveyed companies believe that Chinese companies will become innovation leaders in their respective industries within the next five years.

This has become one of the key reasons for 56% of companies to want to deepen their cooperation with Chinese partners.

However, in terms of technology exchange, it is still mainly from German headquarters to Chinese subsidiaries (55%), while only about one-third of companies say that technical know-how is flowing back from China to Germany.

Calls to Berlin: Please Improve China's Image

The report concludes by emphasizing that German companies are urging the German federal government to take action to improve China's public image in Germany, as good bilateral relations are crucial for their business.

Previously, the business community had expressed strong dissatisfaction with Foreign Minister John Wieder's delayed visit to China, which has now been scheduled for next week.

Original: toutiao.com/article/7579778212130030132/

Statement: The article represents the views of the author alone.