Financial expert analyzes: German companies are investing in China despite the economic weakness

Financial expert analyzes: German companies are investing in China despite the economic weakness

According to a report by www.merkur.de, German companies continue to do business in China and plan to continue investing in the People's Republic despite the weaker economy. Although 83 percent of companies surveyed see the Chinese economy in a downward trend, 79 percent still expect continued growth in their own industry over the next five years. Nevertheless, 54 percent of the companies surveyed stated that China's attractiveness as an investment location was generally decreasing.

Planned investments in China remain at 54 percent due to the need to remain competitive. This shows that investments are necessary due to competitive pressure and unequal market access conditions.

The survey also found that many German companies minimize their risk and invest in other countries, but are still active in China. Foreign direct investment in China fell eight percent in 2023, indicating some uncertainty in the market. German companies are also relying on “China plus X” strategies to take advantage of local innovation opportunities in China and to make themselves more independent of the German headquarters.

The AHK calls for fair competitive conditions in China and criticizes the preferential treatment of state-owned companies and legal uncertainties. Despite these challenges, in some industries there is a freer market in which innovative and agile companies are successful.

Overall, the complex mood of the German business community in China reflects that, despite existing challenges, companies want to continue investing in China in order to benefit from the market opportunities and innovation potential. The market remains attractive due to its size and importance, even as risks and challenges increase.