German Chancellor Angela Merkel was received in Beijing last week with a large business delegation for her 12th visit to China — a record for any Western leader — indicating how important the relationship between the world’s second and fourth biggest economies remains, CGTN.com reported
Some 5,000 German companies currently operate in China, according to the German Chamber of Commerce (AHK).
These include big names like automakers Volkswagen, Daimler and Mercedes, industrial giant Siemens, chemical producer BASF and Deutsche Bank.
But small and medium-sized enterprises (SMEs) have also flocked to China over the years, lured by low labor costs and a Chinese market with huge potential, the report said.
“If you could just get a 10-percent market share, you would be more than busy for the coming five years. And for a small- to medium-sized company, that may already be all the incentive they need, especially if worldwide, the economy is slowing down,” Kerstin Kaehler, manager of the German Enterprise Centre Qingdao (GECQ), told CGTN.
The GECQ was established three years ago to host German as well as non-German SMEs and offers them support in setting up business and navigating the system in China.
In a sign of just how diverse Germany’s presence here has become, the GECQ’s tenants include a water treatment company, agricultural machinery firms, an architectural bureau building a passive house nearby and another company looking at ways to turn waste into biogas.
No longer is it only carmakers, engineering and manufacturing firms that set up shop here: as environmental concerns become ever more a priority worldwide, China too has become a prime location to develop sustainable projects.
Meanwhile, Germany has long enjoyed a stellar reputation in China.
“There is a sometimes surprisingly strong positive bias towards German quality… that is still quite entrenched in the Chinese consumer mindset,” noted Kaehler.
Whether it is cars, machinery or even cosmetics, products bearing the black-red-gold flag still stand for quality, durability and reliability, the report said.
Even the 2015 Volkswagen emissions scandal did not dampen Chinese enthusiasm for the brand, and the company remains the clear market leader in terms of sales.
One challenge on the horizon for German and other foreign businesses will be China’s new company social credit system, which will come into force next year and will monitor businesses’ behavior and adjust their score according to that.
“That is going to, in the long run, I think, be an advantage in making the playing field more level for everyone by ensuring compliance. But in the short term, it is going to need a lot of extra work, a lot of extra resources and quite a bit of dedication to fully understand what is going to happen,” according to Kaehler.
Last month, the AHK warned that with less than a year to go before it is implemented, “almost seven out of 10 German companies in China are not familiar with the system, its mode of operation and its objectives in the business context.”
Still, despite such challenges and talk of slowing economic growth, German companies are here to stay.
“The step to come here is so big that … once they have committed they usually have really calculated everything three to five times, have thought it through and finally made their commitment and then they tend to stick to it,” and this is especially the case with SMEs, said Kaehler.
In other news, according to China Daily, the Chinese Academy of Sciences and the German National Academy of Sciences Leopoldina signed the Beijing Declaration, pledging to jointly promote basic research and foster young scientists.
The declaration, released at the opening of a joint conference, said basic science is at the heart of innovation and future science will be integrative, inclusive and responsible.
The two academies agreed in the declaration that while science endeavors to explore the boundaries of knowledge, it must take on its share of social responsibility, be committed to contributing to sustainable development and strictly adhere to moral and ethical norms.
They pledge that they will organize a series of exchanges on scientific issues of common concern and further strengthen mutual trust, consensus and cooperation to establish a robust scientific environment in the international community.
“We are very proud that such powerful academies, the academy in China and our German academy, can form such an alliance,” said Joerg Hacker, president of the German National Academy of Sciences Leopoldina.