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Cover Archive
Special> 40th Anniversary of Sino-German Diplomatic Relations> Cover Archive
UPDATED: September 28, 2007 NO. 40 OCTOBER 4, 2007
Guten Tag, China!
Through 27 years of investment in China, German companies have secured excellent economic returns and have positively influenced the Chinese economy
By LAN XINZHEN
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Lu Bo, Deputy Director of the Department of World Economy and Trade of the Chinese Academy of International Trade and Economic Cooperation affiliated with MOFCOM, points out that German companies have major advantages when utilizing the Chinese market with their high-quality products, advanced technologies and abundant capital. Cooperation between China and Germany in the investment area, especially in the fields like new and high technologies, as well as advanced equipment, holds great potential.

Germany is China's largest European source of technology, after only the United States and Japan in the entire world. In the first quarter of 2007, China and Germany signed 270 contracts for technology introduction worth of $86.11 billion.

SME Spearheading

Automobiles, mechanical devices and electronic equipment, as well as chemicals are the three pillar industries of Germany where SMEs account for over 99 percent of the total. SMEs in the three industries are also the first to make their way into China.

Ernest & Young, a German accounting firm, conducted a survey on the economic and trade cooperation of German SMEs with China in 2006. The results indicated that more and more German SMEs have become aware of the huge potential of China and intend to transfer their production bases to China in the medium or long term. The survey also showed that 17 percent of German SMEs have direct economic and trade relations with China; 26 percent of German SMEs think that the rise of the Chinese economy has brought them positive influences; and 50 percent of German SMEs with economic and trade relationships with China have positive opinions of the Chinese market.

To German entrepreneurs, China is full of opportunities. The fierce international competition in the Chinese market forces German companies to strengthen their investment in China. For example, because of the intensive competition pressure from U.S. and Japanese automakers, as well as domestic Chinese companies, DaimlerChrysler has been preparing to establish its Northeast Asia Headquarters in Beijing.

In Yang's opinion, what's more important is that the two countries have a highly complementary economic relationship. According to Yang's estimation, by 2010, the direct investment made by German companies in China will double, reaching $30 billion.

Positive influences

The Chinese auto industry is most influenced by Germany. Before the production of Santana cars, Volkswagen sent Chinese engineers and mechanics to factories based in Germany and Brazil for training. Since that time, before production of new models such as Jetta, Passat and Polo, Chinese employees of Volkswagen have received field training overseas or in domestic factories.

"German companies invite Chinese technical and research personnel to Germany for advanced studies and training, so that the latter can learn not only new technologies, but also new management expertise," said Wang Jinzhen, Director of the International Relations Department of the China Council for the Promotion of International Trade.

Prior to cooperating with Volkswagen, Chinese auto industry was of a limited scale and lacked professionals. Yet 10 years later, the Chinese auto industry has improved in terms of scale as well as quality and management levels.

Yang believes that the impacts brought by German companies to China have been positive. Beside advanced technology and management, they have served as an important tax source for the Chinese Government. At the same time, German companies have provided a large number of job opportunities to China.

As China strengthens its efforts in environment protection, advanced German environmental technology has enormous opportunities. China increasingly needs advanced environment-friendly technologies and has created favorable policies for them, making it the largest market for such products in the world. This will attract more and more German companies engaged in environment protection to enter China and cooperate with Chinese companies. Sino-German cooperation in environment protection technologies will be a major highlight in the economic cooperation between the two countries in the future.

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