AHK survey: German companies disadvantaged in China

China is one of the most important markets – also for German companies. However, according to a survey by the German Chamber of Foreign Trade in China, conditions have deteriorated. Many companies feel disadvantaged.

A third of the German companies operating in China see themselves at a disadvantage in competition on the Chinese market. This is the result of a study by the German Chamber of Commerce in China. Almost 600 companies took part in the survey. According to this, it is easier for Chinese companies to enter the market and get public supply and construction contracts than German companies in China.

According to the German Chamber of Foreign Trade in China, the fact that China is increasingly focusing on its own economy and wants to strengthen domestic competition has become the greatest challenge for German companies. The AHK demands from China that all companies are treated equally. It is important for German companies to know whether equality is provided for in the Chinese economic system.

Corona makes the conditions even more difficult

German companies in China have also suffered from the closed borders and strict entry regulations since the beginning of the corona pandemic. The process of issuing visas takes longer, flights are repeatedly canceled and all those entering the country have to go into a hotel quarantine lasting several weeks. This is a hardly reasonable hurdle for German companies in business with China. According to the AHK survey, the entry regulations impair mutual understanding and prevent foreign investments.

“The reduced connectivity between our two regions since the beginning of the corona pandemic is a serious concern for all of us,” warned Frank Rückert, the envoy of the German Embassy in Beijing, on the occasion of the presentation of the chamber survey.

New problems feared because of Omicron

German companies are also concerned about the omicron variant of the corona virus, which was first detected in Chinese cities last week. “Omicron could lead to massive lockdowns in the future, which would have consequences for German companies,” said Andreas Glunz, Head of International Business at the auditing firm KPMG in Germany, which was involved in the Chamber of Commerce survey.

The government in Beijing continues to rely on isolation when dealing with the corona virus. Nationwide, only around 150 cases were reported daily – in a country with 1.4 billion people. But experts are concerned that Omikron could push the Chinese government’s zero-Covid strategy to its limits. There were warnings of disruptions to supply chains and paralyzed factories, which could also have consequences for the entire global economy. The recent energy shortages in many regions and the crisis in the Chinese real estate market would also dampen the mood among German companies, said Glunz.

Optimism of German companies slightly subdued

In fact, according to the survey, the optimism of German companies operating in China has been scratched. At 51 percent, just over half are still confident about the future; compared to the previous year, however, the value has shrunk. In 2021, 66 percent of the companies surveyed were still optimistic about their future in China. 18 percent of companies are preparing for worsening prospects in 2022 – after nine percent in the previous year.

After all, 60 percent of the companies state that they were able to increase their business in China last year and that they expect the same for 2022. “German companies in China are very optimistic about the new year, and their commitment to the market remains undiminished,” said Clas Neumann, President of the German Chamber of Commerce in China.

Appeal to the new traffic light government

Irrespective of this, the chamber called on the new federal government to take companies’ concerns into account in their China strategy. “From the point of view of German companies, the new federal government should continue to work to improve the competitive conditions and relax travel restrictions,” said Neumann. “At the same time, she should continue the dialogue and strive for an adjustment of the German-Chinese economic cooperation in various areas.”

The Chinese market remains one of the most important global markets for German companies. According to the survey, only four percent of companies are considering leaving China.