Beijing Review: What is the role of the German Chamber of Commerce in promoting bilateral economic ties between the two countries?

Jutta Ludwig: Actually, we are creating a dedicated and effective forum for the development of Sino-German trade and investment relations. We provide information and tips of practical relevance for the commencement and implementation of business activities in China. We offer a platform for business relations and cooperation, including network opportunities. We represent the interests of the German industry and hold talks with our Chinese partners within the administration regarding the politics as well as law of Germany.

Most importantly is the support we give to German companies who want to enter the Chinese market. There are a lot of chances for machinery, equipment services, insurance, banking, consulting and IT in China. We give German companies the first assessment of the Chinese market, and if they need this, we help them to set up strategies. We try to find the right location for their businesses in China. We give them advice about what kind of institutions they should set up, like a subsidiary or a joint venture.

What are the special services you offer your member enterprises?

I should point it out that not all companies that we advise are automatically members. They do not necessarily become members in order to get our advice, but they have to pay for our advice. About 80-90 percent of the newcomers, I think, first contact the chamber before they enter the market. More than one third of the 3,500 German companies across China are now our members.

The services we give to our members are very broad. We give them a lot of information, introduce them to a lot of events and do a lot of matchmaking. We organize meetings in order to establish networking and information flow between Chinese and German companies.

What are the most favored sectors for German investors in China?

The most favored sectors to German investors here in China include infrastructure, energy and environmental engineering, as well as the medical sector.

China plans to extend the existing railway system from 80,000 km to 100,000 km by 2020, with a total investment of about 200 billion euros ($148.15 billion), and foreign investments in this sector will be necessary. German companies with skilled blue-collar workers have shown strong performance in this sector. There are also possibilities for cooperation on urban transportation systems in the economic hotspots, as Beijing prepares for the upcoming summer Olympics in 2008, and Shanghai for the World Expo in 2010. Another area for infrastructure construction cooperation is the building and operation of airports.

German companies are also interested in renewable energy, energy-efficient construction, water treatment and reduction of air pollution. Energy consumption in China will increase by 30-35 percent by 2025. The government has made it clear in the 11th Five-Year Plan (2006-10) that they would spend 140 billion euros ($103.7 billion) on improvements in the fields of water supply, water treatment, reduction of air pollution, and constructing 1,000 new sewage treatment plants by 2010. German companies have rich experience, and their technologies in this field enjoy a high international reputation. They have already successfully engaged in these fields in the past and will continue to do so in cooperation with Chinese partners.

Another area is the medical sector. German companies would like to cooperate with their Chinese partners in building hospitals, improving management, providing supply of pharmaceuticals and medical technology products, and all fields of potential medical cooperation.

Generally speaking, cooperation prospects are also promising in areas of process engineering, and energy efficient and environmental-sound production technologies and materials.

What are the difficulties German companies starting a business in China generally encounter?

First of all, they need a lot of information. What are the obstacles? Where are the chances and opportunities? This is the most important homework they need to do before they enter the market. The second is they have to learn about all the laws and regulations in China. This is the most urgent. Then of course, they have to find their niche where their specific knowledge can be used. But it is not so hard for German companies, because Germans are champions of world trade. They are setting the state of art for most of the branches. Most German companies coming to China are in a position that they can be competitive in this market.