Key findings:

• Two-thirds of the surveyed companies say they are affected by unfair competition.
• German companies consider themselves superior to their Chinese competitors in terms of product quality, technological leadership, and innovation strength.
• They rate their cost efficiency, time to market readiness, and innovation speed as weakest compared to Chinese competition.
• Competitive disadvantages are particularly seen in market access and access to networks (e.g., government, local authorities, access to public tenders, etc.).
• The heightened competition is expected to cause increased cost pressures, reduced profit margins, and lower market shares.

Download the results in English

Download the results in Chinese

Key findings:

Several challenges lead to relatively slow progress of compliance:  
Only 8% of companies which applied passed the review. 38 % of the survey respondent don't think that the law applies to them and more than 20% plan to fulfill their reporting obligations after the release of the “Draft Regulation" by the Cyberspace Administration of China.

Multiple application creates heavy workload for German companies:

Given that there is no restriction for each company choosing only one method of application, 42% try to make multiple compliance applications using several items.

Low transparency is the main challenge during the application process:

Half of the companies surveyed who applied see unclear regulatory requirements and the inability to keep up to date with the application progress as major concerns.

Multiple internal and external factors complicate data processing:

Vague definitions of important data (54%), unclear amount of data (50%) and heavy workload (50%) are the biggest challenges during the data processing for German companies.

Many companies are still in a wait-and-see-mode:

Two thirds of the companies that plan but have not yet started to apply think that they do not fall under the scope of the regulation and 56% wait for the release of the important data catalogue. 

Companies suffer from heavy costs:

85 % of surveyed companies have already made some investment. The biggest impact of compliance with cross-border data transfer are additional compliance costs (70%) and increased communication costs & risks for communication with headquarters (57%).

Download the results

Amid the emergence of strong Chinese competitors, the German Chamber of Commerce in China calls on Chinese policymakers to create a true level playing field for foreign businesses by implementing measures that promote fair competition and strengthen investor confidence.

Key Findings:

• Growth optimism amidst market slump: While 83% believe China’s economy is currently facing a downward trajectory, 64% view this as a temporary economic slowdown and predict a bounce back within the next 1-3 years. 42% of German companies expect a positive industry development in 2024, compared to only 21% in 2023. Furthermore, 78% expect consistent growth over the next five years.
• Competition triggers investments despite decreased overall attractiveness: Although 54% of companies believe that China's investment appeal is declining in comparison to other markets, an equal percentage are planning to increase their investments in the country over the next two years. 79% say that continued investments are necessary to remain competitive in China. Furthermore, 37% believe China’s attractiveness as an innovation market is increasing compared to other markets. 46% are planning to cooperate with local partners to stay competitive.
• China’s innovators challenge German companies: 5% of survey respondents currently regard Chinese companies as innovation leaders in their industry, but 46% foresee them becoming leaders within the next 5 years. In the automotive sector, 11% of companies view Chinese competitors as innovation leaders, with 58% expecting them to take on that role over the next 5 years.
• Regulatory challenges hinder competitiveness: 32% of respondents consider legal uncertainty as the most significant regulatory challenge. Additionally, 22% report experiencing unequal treatment compared to their local competitors. In particular, more than half (53%) of those who participate in public procurement encountered obstacles, such as a lack of transparency and ‘Buy China’ policies.
• Companies are ramping up risk management: 44% have taken steps to address potential risks linked to their business operations in China. Of these companies, 83% attribute their actions to geopolitical tensions, while 45% cite China's economic development as a key factor. Measures include building China-independent supply chains (45%), setting up additional operations outside China (40%), but also localizing R&D operations in China (34%).

About the Business Confidence Survey 2023/24

Between September 5 and October 6, 2023, a total of 566 member companies of the German Chamber of Commerce in China responded to the survey, making this one of the most representative samples of German business sentiment in China. The Business Confidence Survey was first launched in 2007 – it has been a key instrument for measuring the business sentiment of German companies operating in China and the main tool and source of our advocacy work.

Download the Business Confidence Survey 2023/24

Download the Press Release

Download the Executive Summary

In a world where the pace of change is unrelenting, companies find themselves at the crossroads of innovation and adaptation. In our cover stories, we reflect on the broader changes in work dynamics and discuss the challenges faced by German managers in China. We explore the concept of Business Ambidexterity, digital device usage in private lives and the workplace, and the transformative shift in office design as a response to the changing nature of work.

In addition, we look into China’s Arbitration Reform, risk management and business localization in China, and the latest trends in China’s e-commerce landscape.

We hope you enjoy this issue of the Ticker and find the articles thought-provoking and useful. As always, please share, comment, discuss, offer suggestions, and contribute your valuable insights to our future editions of the German Chamber Ticker.

Download Full PDF

The event is an integral part of a digital business delegation trip and was organized by AHK Greater China within the framework of the Competence Centre for Mining & Resources in China that is funded by the German Federal Ministry for Economic Affairs and Climate Action (BMWK).

More than 90 participants attended the online forum, including representatives of German and Chinese companies and institutions of the mining and raw materials sector as well as decision-makers from administration and politics.

On the one hand, the forum provided an overview of current developments and trends in the mining industry in China and Germany. On the other hand, the conference included presentations of technology solutions of selected German companies as well as possible fields of cooperation with companies in China. In this regard, the participating German companies illustrated a range of innovative German solutions: From innovative solutions for underground and tailings transportation, to state-of-the-art equipment for efficient and safe mining, extraction, and processing, as well as cutting-edge AI-driven systems and digitalization solutions for smart mining.

In detail, the following technologies were presented:

• Safe and Efficient Underground Mining Mechanization Technology (Herrenknecht Tunnelling Equipment)
• Ultra Fine Grinding for Mining Applications (NETZSCH Machinery and Instruments)
• Innovative AI-driven Decision Support for Green Mining (PSI FLS Fuzzy Logik & Neuro Systeme)
• Safe and Efficient Transport of Tailings Handling and Backfilling (Putzmeister Concrete Pumps)
• Centrifugal Solutions for the Mining Industry (Siebtechnik Tema Process Equipment)
• Digitalization Solutions for Sustainable Mining Industry (Siemens AG)
• Reliable Transport Solutions for Mining and Tunnelling (SMT Scharf)

AHK Greater China published an English-Chinese brochure accompanying the forum, describing the participating German companies, as well as their solutions and interests in more detail.

For further information please reach out to us:

Ms. Lijuan YE

Head of Competence Centre for Mining & Resources

German Industry & Commerce Greater China

ye.lijuan(at)china.ahk.de

Tel: +86-20 8755 1299

Ms. Conghua XU

Project Manager of Competence Centre for Mining & Resources

German Industry & Commerce Greater China

xu.conghua(at)china.ahk.de

Tel: +86-10 6539 6653

© German Industry & Commerce Greater China

The 6th China International Import Expo (CIIE) was successfully held at the National Exhibition and Convention Center in Shanghai from November 5 to 10, 2023. As the organizer of the German Pavilion, AHK Greater China, together with 22 German companies and two federal states, successfully completed the exhibition in the German National Pavilion and the Business Exhibition areas, with a total exhibition area of 842 square meters.

On the morning of November 6, the German National Pavilion was opened in Hall 5.2. The opening ceremony featured opening remarks from Mr. Maximilian Butek, Executive Director and Board Member of the German Chamber of Commerce in China-Shanghai, Mr. Pit Heltmann, Consul General of the Federal Republic of Germany in Shanghai, Mr. CHEN Jing, President of Shanghai People's Association for Friendship with Foreign Countries, and Mr. SONG Shangzhe, Vice President of NECC. The ceremony was presided over by Mr. Ingo XU, Vice President of AHK Greater China. Representatives from various companies and governments attended the event.

Following the opening ceremony, Mr. Maximilian Butek and Consul General Pit Heltmann, together with representatives of the German Pavilion, visited various German companies at the CIIE.

At the same time, the German National Pavilion offered plenty of exciting on-site activities, including multiple presentations by German companies, federal states and industrial parks, as well as new product launches and more. In addition, visitors and exhibitors enjoyed various giveaways and delicacies sponsored by partners.

To thank the exhibitors and partners for their support, AHK Greater China invited more than 60 representatives from exhibitors, federal states, and sponsors to the CIIE dinner, where they introduced themselves, exchanged ideas, and built-up deep friendships and connections.

On November 10th, the closing ceremony was held to celebrate another successful exhibition of the German Pavilion. We sincerely thank all exhibitors, sponsors and partners for their continued support and trust!

CIIE Official Website: https://www.ciie.org/zbh/index.html

For more information and introduction of exhibitors, please click to download “German Company Directory”

Contact us:

AHK Greater China

Ms. DONG Yini

Tel: +86-21 3858 5019

E-Mail: dong.yini@china.ahk.de

Download the report

1. What are the characteristics of the Chinese e-commerce market?

China has the world's largest e-commerce market, valued at USD 2.3 trillion in 2022. This massive market is driven by the rising middle class, increasing smartphone and internet penetration, popularity of online shopping platforms, and government support. China's middle class reached over 700 million consumers in 2022, embracing online shopping. Mobile internet users exceeded 1.07 billion, facilitating e-commerce growth as Chinese consumers use their phones for transactions. Major platforms like Alibaba's Tmall, JD.com and Pinduoduo dominate the market, Douyin, Kwai and WeChat are also growing at a fast pace. The government encourages e-commerce through initiatives like the Digital China strategy, cross-border trade policies, and emphasizing innovation in the 14th Five-Year Plan. Emerging trends like social commerce, with WeChat and Douyin enabling innovative engagement, and cross-border e-commerce, reaching over USD 300 billion in 2022, are also shaping the market. However, challenges exist like intense competition, counterfeit goods, complex logistics, and regulatory uncertainty. Overall, China's e-commerce potential remains immense, offering opportunities despite inherent complexities.

2. What are the differences between e-commerce in China and Germany?

China and Germany differ markedly in their e-commerce landscapes due to factors like market size, platforms, mobile usage, payments, and consumer behavior. China has the world's largest e-commerce market, dominated by massive platforms like Alibaba and JD.com offering comprehensive ecosystems. Mobile shopping accounts for over 95% of sales in China. Chinese consumers heavily utilize mobile payments like Alipay and WeChat Pay. They rely on influencers and seek discounts. Germany has a smaller, more fragmented e-commerce market focused on quality and brand trust. Mobile and cross-border e-commerce are less prevalent. Germany favors traditional payment methods over mobile platforms. While China's e-commerce industry is immense and mobile-first, Germany's online retail landscape remains centered around desktop experiences and valuing brand relationships. Understanding these key differences is crucial for companies operating in both markets.

3. What are relevant e-commerce regulations and policies?

The Chinese government has implemented extensive regulations and policies to govern the rapidly growing e-commerce industry in China. Key objectives include ensuring fair competition, protecting consumer rights, combating counterfeiting, and promoting sustainable development. The regulatory framework consists of bodies like the State Administration for Market Regulation (SAMR) and Ministry of Commerce. Laws such as the E-Commerce Law and Consumer Protection Law form the foundation. E-commerce operators must register with authorities and obtain necessary licenses. Specific regulations cover cross-border trade, taxation, data security, and antitrust behavior. Protecting intellectual property rights is a major focus, with e-commerce platforms expected to curb counterfeit goods. Consumer protection regulations mandate transparent transactions, prohibit false advertising and unfair practices. With dominant players like Alibaba and JD.com, anti-monopoly scrutiny has increased. Overall, the complex regulatory environment aims to nurture innovation and growth while mitigating risks. Though challenging to navigate, compliance and adaptability are key for businesses to unlock the opportunities within China's tightly regulated yet dynamic e-commerce industry.

4. Marketing strategies

To successfully penetrate and thrive in China's complex e-commerce landscape, German brands must prioritize comprehensive market research, cultivate a localized and customer-centric business strategy, and utilize data-driven digital marketing techniques on popular Chinese platforms.

First and foremost, extensive market research into Chinese consumer behavior and preferences is essential, including surveys and focus groups. Companies should then localize e-commerce strategies by translating websites into Chinese, integrating local payment systems like Alipay, and optimizing for mobile. Leveraging leading Chinese e-commerce platforms like Tmall and JD.com expands reach and benefits from existing infrastructure. Cross-border e-commerce provides a streamlined entry point to engage Chinese consumers directly. Building brand awareness requires utilizing SEO, social media marketing, and influencer collaborations on platforms like WeChat and Douyin.

Strategic partnerships with local entities assist in navigating complexities. Providing excellent customer service and after-sales support is crucial for fostering loyalty. Digital marketing utilizing targeted ads and promotional campaigns on key Chinese platforms helps effectively reach target demographics. Continuously monitoring performance metrics and adjusting strategies accordingly is imperative.

Overall, a highly localized, customer-centric and data-driven marketing approach is key for German brands seeking to penetrate and expand within China's enormous yet intricate e-commerce sphere.

5. Recommendations

Entering the Chinese e-commerce market offers tremendous opportunities for German companies, but it requires careful planning, extensive understanding of the local environment, and a tailor-made strategy to succeed.

German companies should start by gaining an in-depth understanding of the Chinese consumer, their buying behavior, and preferences. They should conduct thorough market research to develop accurate consumer insights. Understanding the importance of mobile commerce, social media influencers, and interactive content in driving purchases can inform their marketing and brand strategies.

Localization is key for success, meaning translating and optimizing websites and mobile applications into Chinese, and integrating popular local payment systems such as Alipay and WeChat Pay.

Collaborating with leading Chinese e-commerce platforms like Alibaba's Tmall and JD.com will boost their reach exponentially. Navigating a foreign market also involves challenges such as fluctuating regulatory environments, trade-related policies, and the need for precise market entry strategies, making it important for companies to stay agile.

Lastly, investing in digital marketing campaigns that are localized and trustworthy, and employing comprehensive data analytics for strategic decision-making can significantly boost a German company's ability to successfully penetrate and grow in the Chinese e-commerce market.

E-Commerce Solutions of AHK Greater China

AHK Greater China is pleased to provide comprehensive e-commerce solutions designed to swiftly introduce your business to the vast and rapidly evolving Chinese market. Our e-commerce solutions extend far beyond providing a mere platform for online selling. We integrate our network, experience, and local market understanding to strategize your entry or growth in China's e-commerce market. With our assistance, you can navigate through your e-commerce journey in China, seizing local opportunities and expanding your global footprint.

Contact

Jacob SHAO

Strategy Consultant

shao.jacob(at)china.ahk.de

Download the report

China's rapid economic development has been driven in part by its ambitious digital transformation initiatives. In this issue of the magazine, we present case studies illustrating how companies are rewriting the rules of business through digital innovation. We also discuss how AI is revolutionizing industries and discuss its potential but also challenges that accompany its rapid growth. We also look into the challenges and opportunities for foreign-invested firms participating in China's R&D scene and the strategic considerations and potential limitations involved. We provide an overview of China's dynamic tech environment, showcasing its progress, goals, and the role foreign companies play in shaping its future. And we explore China’s regulatory landscape and legal frameworks with regards to artificial intelligence, providing insights into the complexities companies face in this evolving technological landscape.

In addition to these cover stories, we examine the new China Standard Contract approach for outbound transfer of personal information, look into energy efficient HVAC systems in China and share the findings of this year’s Labor Market and Salary Report.

We hope you enjoy this issue of the Ticker and find the articles thought-provoking and useful. As always, please share, comment, discuss, offer suggestions, and contribute your valuable insights to our future editions of the German Chamber Ticker.

Download Full PDF

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After the groundbreaking success of X-Days 2019 in Shenzhen, we are back with one of the most anticipated events of the year: The AHK Greater China Xceleration Days (X-Days) will be held from November 8 to 11 in Shanghai, covering three major topics: Innovation, Decarbonization, and Market Trends.

From field trips to industry-specific event formats, exhibition spaces and social gatherings (incl. our More Than A Market Awards Gala Dinner and the 23rd German Ball), this event has it all! Top-level speakers, an immersive location and delicious local cuisine will provide each guest with a fantastic networking experience throughout the multi-day event.

We are pleased to announce that the X-Days website has been officially launched. Visit our website and get the latest updates about X-Days 2023!

X-Days 2023 will be your chance to network with like-minded professionals, establish new partnerships and advance your business cooperation on multiple levels. Don't miss out on this incredible opportunity. Pre-register now and take your business to the next level!

Our event partners and contributors will enjoy huge exposure and additional benefits before, during, and after the multi-day event. If you want to increase your footprint at X-Days 2023 and get the most out of this unique event, either as a partner or speaker, get in touch with our AHK X-Days events team!

For X-Days partnership and speaker contribution, please contact our AHK events team: xdays(at)china.ahk.de

Download X-Days Guide

Key Findings:

Expected salary growth for 2024 hits three-year-low: German companies operating in China expect a 4.49% salary growth for 2024, which is 0.39 percentage points below the 2023 projection. This marks the fourth consecutive year of below-five-percent wage growth. 

Effective salary growth in 2023 below projections: In 2023, effective salaries increased by 4.76%, slightly lower than the initial projection of 4.88%. This marks the first time in three years that effective salaries have fallen below expectations. 

Only the automotive sector beats salary projections in 2023: Automotive is the sole industry to report effective salary growth higher than expected in 2023, at 4.79% as compared to the initial projection of 4.56%. While the salary projections in the machinery and industrial equipment sector were met, wages in all other industries came in lower than forecasted.

Share of companies employing foreigners hits all-time-low: In 2023, the percentage of foreigners employed by German companies in China hit an all-time low of 69.5%, down 6.7 percentage points from pre-pandemic levels. Local employees are most likely to take over mid-level management and technical roles, while top management positions are the least likely to be filled by locals.

Higher compensation remains the main reason for replacement of foreign workers: 60.3% of German companies name differences in compensation as the main reason for replacing foreign employees. Meanwhile, 26.4% reported facing difficulties in attracting foreign employees.

About the Labor Market & Salary Report

The 16^th edition of the Labor Market & Salary Report is a published by the German Chamber of Commerce in partnership with Direct HR. Based on an online survey conducted between May 10 and June 8, 2023, the report received responses from 524 member companies of the Chamber. The report is a valuable resource for executives and HR professionals of German companies in China. It provides a comprehensive benchmark of the wage developments in China, as well as the latest trends and hottest topics on the Chinese labor market.

About the German Chamber of Commerce in China 

The German Chamber of Commerce in China currently has more than 2,100 members and is the official member organization for German companies in China. It helps its members to thrive in the Chinese market by providing relevant market intelligence and practical guidance. It offers a platform for the Sino-German business community and advocates for its members' interests toward stakeholders, including government bodies and the public. 

To access the member-exclusive, full report, please visit the download area of the Member Directory.  A short version of the survey can be downloaded here.

Media Contact 

Carina Mingle 

Head of Media Relations &  

Corporate Communications 

Mingle.carina(at)china.ahk.de 

+86-10-6539-6670 

The food and beverage market in China has enormous potential, but high costs and complex legal frameworks can present challenges for individual overseas SMEs seeking to enter the Chinese market.

To address this, we are constructing a cross-border e-commerce online store called "The German Food and Beverage National Pavilion" on Tmall Global, JD Worldwide, and Tik Tok Worldwide. The store will serve as a sales platform in China for German food companies, providing one-stop service and support from local storage and customs declaration to sales and after-sales.

This project is led by AHK Greater China and endorsed by DCTA as the sole operator of the National German Food Pavilion, tasked with setting up the cross-border e-commerce pavilion on a whole-of-China platform. Our goal is to manage the operation of German food brands and products stationed in the National Pavilion and complete the production and sale of products across the supply chain.

We invite German food and beverage companies to join us, and those whose brands are represented in the pavilion for the first time will not have to pay any operating costs, giving them the opportunity to test the Chinese market at minimal cost. The online store is set to open in mid-October.

Common Brand Pain Points 

• Little understanding of China's e-commerce market: German food brands that have only just entered China's E-Commerce market often do not understand China's e-commerce environment, the complex legal framework and the fast iterative e-commerce operations.
• Few channels to find partners: The agency market is a mixed bag, making it difficult for brands to find a trustworthy partner.
• High cost of independent shops: Brands need to bear the cost of logistics, warehousing, operations, customer service and other aspects. The cost and risk are high for brands.
• High cost of marketing and publicity: The brand's influence is still insufficient at the early stage of operation in a new market, and the marketing and publicity budget is often limited.

Advantages 

• Zero Fee: Brands entering the pavilion for the first time can test the Chinese market at the lowest cost, without paying any operating fees.
• One-stop Service: AHK  Greater China provides one-stop solutions for logistics, warehousing, customs clearance, warehouse operations, marketing, and sales to help brands simplify their operations in China.
• Real Market Feedback: Brands can access market analysis on volume and growth trends, consumer profiles, and unit price ranges for each product to gain insights into the Chinese market.
• Integrated Communication Matrix: AHK Greater China uses its own media resources, including the Pavilion's media, offline flash shops, and community networks to improve the visibility of German food brands in the Chinese market.

For more information and cooperation, please contact Mr. Xiaofei WEN via email or telephone at (+86) 28 8533 6840. 

Findings:

• Business outlook restrained: More than half of German companies expect unchanged or worsening industry development for 2023, despite China's pivot away from zero-COVID.
• Profit development weaker than expected: Last year, 22% of companies expected profits to decrease by more than 5% for 2023. This year, that number has increased to 32%, a jump of 10 percentage points.
• Investment confidence unimpressed by end of Zero-COVID: 55% of German companies are planning to increase investment in China in the coming two years, which is 4 percentage points more than last year, but far behind pre-COVID levels.
• Sluggish market development and politics deters investors: The main reasons for not investing are low expectations for market expansion, ongoing geopolitical tensions, and China's self-reliance policies.
• Competition drives investment: If companies continue investing, 62% are doing so to remain competitive in the Chinese market, while 48% expect to benefit from the market’s growth potential. 
• Localization & diversification trend continues: Headquarters’ response to rising geopolitical tensions combines increased diversification outside of China and intensified localization inside China.
• China’s policy makers need to act now: Measures to stimulate consumer confidence and targeted support for businesses are required. Currently existing business obstacles need to be removed. 
• Wish list for government consultations: 45% of German companies desire a clearer regulatory framework, while 60% ask for increased collaboration in decarbonization, smart manufacturing, and mobility.
• Visa backlog pressing concern: Over 75% of German companies are negatively impacted by slow processing of business visas to Germany for Chinese employees.

About the Post-COVID Flash Survey:

Between May 9 and 17, 2023, a total of 288 member companies of the German Chamber of Commerce in China responded to the survey. The Post-COVID Flash Survey captures the business sentiment among German Companies in China after the Chinese government’s pivot away from the Zero-COVID-policy. The results of the Post-COVID Flash Survey are compared with those of the Business Confidence Survey 2022/23, which was conducted between August 23 and September 21, 2022.

Media contact:

Carina Mingle 

Head of Media Relations &  

Corporate Communications 

Mingle.carina(at)china.ahk.de 

+86-10-6539-6670 

Download Press Release

Download Full Report

To further support business partnerships in the Chinese construction sector, AHK Greater China hosted a Forum on carbon neutrality building on June 29 in Beijing. The Forum took place in the framework of the "Architecture Carbon Neutrality Technology Conference & Expo" (ACT) and was organized together with the German Sustainable Building Council (DGNB), ESG Alliance and China State Construction Engineering (CSCEC).

As a highlight event of 2023, more than 150 participants attended the conference, including numerous representatives of German and Chinese companies, institutions of the building and construction sector as well as decision-makers from administration and politics.

On the one hand, the conference provided an overview of current developments and trends in the building sector in China and Germany. On the other hand, the conference included presentations of solutions of selected German companies and institutions as well as possible fields of cooperation with companies in China.

During the introductory presentations and panel discussion, high-ranking German and Chinese representatives and decision-makers from the German Embassy, China Ministry of Housing and Urban-Rural Development (MOHURD), Fraunhofer Building Innovation Alliance, China Academy of Building Research (CABR), Agora Energy Transition and CSCEC provided insights into framework conditions and developments for carbon neutrality building and discussed potentials for Sino-German cooperation regarding low-carbon transformative building design, technologies and materials as well as digitalization.

During the following session, participating German partners Luther Design, SMA Solar Technology, Schüco, SoftGrid and DGNB illustrated a range of advanced German solutions that can support China’s '30·60' decarbonization goals: From innovative systems for windows, doors and facades, highly efficient solar and energy storage products, to sustainable architecture and building design strategies and concepts.

For further information please contact:

Mr. Bernhard FELIZETER
Head of Building, Energy & Environment – econet china
German Industry & Commerce Greater China
felizeter.bernhard(at)china.ahk.de
Tel: +86-10 6539 6650

Ms. Conghua XU
Project Manager of Building, Energy & Environment – econet china
German Industry & Commerce Greater China
xu.conghua(at)china.ahk.de
Tel: +86-10 6539 6653

In this edition of our publication, we assemble expert insights and perspectives to offer a comprehensive understanding of the Chinese automotive and mobility market. We examine the intricacies of this industry, shedding light on its unique dynamics while unveiling the exciting opportunities and challenges that lie ahead. Our exploration extends to the remarkable advancements and breakthroughs in electric vehicles, autonomous driving, and intelligent mobility solutions within the Chinese market. Furthermore, we analyze China's influential position in the global NEV market, delve into the decisive role played by Chinese battery manufacturers, and look into the hurdles faced by German automakers in transitioning to electric vehicles. Additionally, we unravel the rapid expansion of Chinese automakers in foreign markets and their transformative impact on the global automotive industry.

In addition to these cover stories, we address other pressing topics such as labor and taxation concerns for foreign employees, the revised Counter-Espionage Law, and the immense potential of China's real estate market.

We hope you enjoy this issue of the Ticker and find the articles thought-provoking and useful. As always, please share, comment, discuss, offer suggestions, and contribute your valuable insights to our future editions of the German Chamber Ticker.

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In this issue of the Ticker, we touch on a few aspects of what companies can do to become more resilient and better equipped to navigate uncertain and volatile market conditions. We explore the evolving Chinese consumer landscape and what will define a resilient brand in the next decade. As the Chinese market is experiencing shifts in supply chains, we look at how businesses adapt to these changes and how they can build greater resilience in their supply chains to navigate the volatile market conditions.

Through a combination of expert insights and opinions, we aim to provide a comprehensive understanding of the current state of the Chinese market, while also shedding light on the opportunities and challenges that lie ahead for businesses operating in this dynamic market.

We hope you enjoy this issue of the Ticker and find the articles thought-provoking and useful. As always, please share, comment, discuss, offer suggestions, and contribute your valuable insights to our future editions of the German Chamber Ticker.

Download Full PDF

The Annual Report 2022 grants an overview of the broad range of activities organized by the German Chamber of Commerce in China in the past year. It features our China-wide advocacy activities, market intelligence, and market expansion, as well as business and social events. The report is distributed among all members and regularly handed out at key Chamber events, business partner, and stakeholder meetings.

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Who was involved?

It took a massive organizational effort to set up the project, which required multiple stakeholders to work hand in hand:

• The German Chamber (AHK Greater China) - main project lead
• The German Embassy - political coordination
• Lufthansa - aircraft carrier
• International Carrier Consult - a specialized airline broker
• Multiple Chinese ministries, provinces, and cities – approvals, coordination of quarantine, logistics, etc.
• The destination of 43 of our flights was Qingdao, where a team of 90 dedicated staff worked tirelessly to support the Charter project.

This endeavor was made possible by the great support and pioneering spirit of our partners. We would like, once again, to express our sincere gratitude and appreciation for their ongoing support. We also thank our passengers for embarking on this extraordinary journey with us.

Time to recap:

“It all started when China sealed its borders in early 2020 due to the pandemic outbreak. Connectivity between both countries came to a halt, and many employees of German companies and their family members were stuck in Germany and were unable to return to China. We needed to find a solution.” says Jens Hildebrandt, Executive Director & Board Member of the German Chamber of Commerce in China | North China.  

A lot of legwork and alignment was required to sort out the visa situation, negotiate a landing permit and the quarantine conditions – but ultimately, all went well!  “It seemed impossible at the time because absolutely no one was allowed to fly to China,” recalls Matthias Goebel, Lufthansa Group Chief Representative in China. “It wasn’t easy but in May 2020, we managed to send the first plane with 179 passengers and 18 crew members to Tianjin.”

13 more flights were operated in 2020, followed by 7 in 2021, 24 in 2022, and five this year. Most of the passengers were employees of German companies and their families. So, was it all Germans? No! We helped passengers from 74 countries return to China!

“Over the last three years, the AHK Charter project has been the lifeline of the German business community in China,” says Ole Grogro, Deputy Head of the Economic Section at the German Embassy in Beijing. “After 50 flights, the project accomplished what it set out to do – connecting China and Germany.” 

The three years of Charter Flights were anything but boring

Applications for visas, PU letters, obtaining the Green Health Code, constant changes to testing requirements, and a quarantine period that ranged from 5 to 28 days, until the centralized quarantine was abolished on January 8, 2023. On the day of departure, a team of up to 24 people worked through the night, troubleshooting and sorting out problems. 

“We have been advocating for the lifting of travel restrictions since the very first day they were imposed. Although the entire team is passionate about the Charter project, we are glad it is no longer necessary,” concludes Jens Hildebrandt. 

Download the full report

The “Old China Story” is Over

In the past decades, China’s core competitiveness was driven by low labor costs, lax environmental regulations, and high capital productivity. These advantages are slowly disappearing. Last year, China’s market attractiveness was further challenged by geopolitical tensions and the effects of the country’s response to COVID-19. Where does China go from here?

The “New China Story” is Being Written

China currently faces significant economic challenges and is lagging in certain areas. However, the country remains an attractive market with a superior industrial cluster and acts as an innovation hub for most multinational companies. Even though it is unlikely for China to replicate past booming decades, its key fundamentals remain robust and unique compared to many other markets. 

China is in the process of building new engines to transform its economy. If the country holds its promise of opening up, foreign companies will be able to contribute to China’s industrial modernization and decarbonization goals as well as benefit from the purchasing power of the growing middle class.

How Can Foreign Companies Adapt to the “New China Story”?

Adapting to the “New China Story” means anticipation and mitigation of risk, and occasional evolution of the business model. Common risks that multinational companies are facing include sanctions and compliance with the latest regulations. Companies within business segments that are strategic to China inherently carry more risk.

Three Strategic Options

a. China-Plus-One Strategy

Supply chain disruptions and geopolitical tensions increase the need for a balance between market potential, cost efficiency, and supply chain resilience. One way to balance those factors is to extend the footprint within the region. Remaining in China while adding operations elsewhere – serving the global market from only one facility might be too risky in the future.

b. Develop a Winning Value Proposition Through Innovation

Through collaboration with local partners who are part of China’s innovation ecosystem, foreign companies can stay competitive. Innovative optimization of existing products helps create new value propositions for integration into their global portfolios. Faced with rising local competition, foreign companies need to accelerate local innovation while leveraging their existing global competencies to keep an advantage for further development and growth.

c. Local-for-Local strategy

The Local-for-Local strategy is a key success factor for foreign companies looking to strengthen their positioning and competitiveness in China. It calls for a new decentralized system separated from the centralized EU or US based global R&D, production, supply chain logistics, and even including sales or services. The local-for-local strategy can empower foreign companies' China operations to act faster, be more customer-oriented, and cost efficient, while increasing the resilience of the supply chains for the local Chinese operations.

Mit dem wirtschaftlichen Aufschwung Chinas und einer stetig wachsenden Mittelschicht hat sich auch die Sport- und Freizeitwirtschaft rasant entwickelt. Laut offiziellen Angaben nahmen im Jahr 2021 insgesamt 400 Millionen Chinesen an Outdoorsportaktivitäten teil. Bis 2025 wird sich China mit 50 Millionen zusätzlichen Wintersportteilnehmern zudem zu einem der größten Wintersportmärkte der Welt entwickeln.

Die Regierung unterstützt diese Entwicklung aktiv: Neben der Veröffentlichung eines nationalen Fitnessplans (2021-2025) haben sich Metropolregionen wie Shenzhen, Chinas „Silicon Valley“ im Herzen der wirtschaftsstarken Perlflussdelta-Region im Süden, und Chengdu, das wirtschaftliche und kulturelle Zentrum Südwest-Chinas, den Ausbau der Outdoor-Angebote zum Ziel gesetzt. Das vermehrte Interesse an Outdooraktivitäten, bietet hier ideale Voraussetzungen für deutsche Anbieter von Sport-, Outdoor- und Campingausrüstung, sich im Markt zu platzieren.

Um diese zu unterstützen, bietet die Geschäftsanbahnung neben einer umfangreichen Zielmarktanalyse die Möglichkeit für teilnehmende Unternehmen, sich über aktuelle Entwicklungen, technologische Trends und Marktbedingungen in China zu informieren sowie ihre Produkte und Dienstleistungen vor einem Fachpublikum zu präsentieren. Darüber hinaus unterstützt die Auslandshandelskammer (AHK) vor Ort bei der Suche nach potenziellen Geschäftspartnern.

Das Projekt ist Bestandteil des Markterschließungsprogramms für KMU und unterliegt den De-Minimis-Regelungen. Der Eigenanteil der Unternehmen für die Teilnahme am Projekt beträgt in Abhängigkeit der Größe des Unternehmens zwischen 500 und 1.000 EUR (netto) zzgl. individueller Reise-, Unterbringungs- und Verpflegungskosten. Die Teilnehmerzahl ist auf maximal 12 Unternehmen begrenzt. Anmeldeschluss ist der 09.06.2023.

Für weitere Informationen und Anmeldung steht Ihnen der folgende Ansprechpartner zur Verfügung:

AHK Greater China                                                                                                  

Projektverantwortlicher: Peter Taubert 
Tel: + 86 10 6539 6637                                             
E-Mail: taubert.peter@china.ahk.de        

Eine Übersicht zu weiteren Projekten des Markterschließungsprogramms für KMU finden Sie unter www.gtai-exportguide.de/mep.      

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Don’t miss the Grand Opening Event of “Source to Grow”, the exclusive Alibaba.com Roadshow, in cooperation with AHK Greater China. The event will start in Munich on January 31 at BWM WELT, from 9.30 am to 1.30 pm.

Expect a line-up of Alibaba.com, executives and experts, Tech & B2B e-commerce KOL and exclusive partners from the industry. Spend a full day packed with insightful presentations, immersive digital experiences, educational workshops and unique opportunities for 1:1 meetings with our experts to allow your company to master the challenges of the future.

Secure one of the strictly limited seats or join us digitally.

Location:

• Munich:
  BWM Welt
  Am Olympiapark 1, 80809

After Munich, the next events will be hosted in

• Hamburg on February 7^th
• Berlin on February 14^th

Contact:

Mr. WEN Xiaofei

Head of E-Commerce Solutions

Email: wen.jfay@china.ahk.de

With articles including:

• China’s Decarbonization Efforts Offer New Business Opportunities
• Prospects of Renewable Hydrogen in China and Its Role in Industrial Decarbonization
• Sino-German Conference on Circular Economy as Contribution to Mineral Raw Materials Supply
• Rebooting China’s Carbon Credits: What Will the Future Bring?

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Over the past decades, China dedicated many of its strategic plans to the creation of a modern business and living environment. Robotics advancement, e-commerce, and the development of smart cities are only a few aspects of China’s digital transformation.

Although there were several bumps along the road, China persisted in its transformation journey, moving forward to creating a digital ecosystem that uses modern technology to shape the urban environment.

In this winter issue of the Ticker, we explore the prospects of China’s smart cities, and the future of remote work; examine the possible effects of collaborative robots on employees; review cross-border data transfer and social insurance benefits for local employees; look into the results of the recent Business Confidence Survey, and much more.

We hope you enjoy this issue of the Ticker and find the articles thought-provoking and useful. As always, please share, comment, discuss, offer suggestions, and contribute your valuable insights to our future editions of the German Chamber Ticker.

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Key findings:

• Business confidence reached a historic low: 49% of German companies find China’s attractiveness to be diminished compared to other markets. Only 51% intend to increase investment in China within the next two years, compared to 71% last year – a drop of 20 percentage points. The main challenges named were China’s zero-COVID-19 policy and geopolitical tensions.
• China’s zero-COVID-19 policy was detrimental to business success in 2022: 66% of German companies named China’s zero-COVID-19 policy as their top operational business challenge and the main reason to decrease investment or exit the market entirely, which 10% of respondents were considering (up from 4% last year.)
• Regulatory hurdles remain a concern: The leading regulatory business challenges are legal uncertainty (33%) as well as cyber and data security regulations (31%), which are tied to the unclear implementation of China’s Cyber Security Framework. Policy initiatives such as ‘Made in China 2025’ and the country’s pursuit of self-reliance give local competitors a leg up, resulting in 29% of German companies reporting unfavorable treatment.
• Diversification and localization are strategic directions: Headquarters’ response to the previous zero-COVID-19 policy and rising geopolitical tensions combines increased diversification outside of China and intensified localization inside China.
• Cautious optimism for 2023: German companies’ expectations for 2022 were adversely affected. Optimism returns in 2023, where 50% expect an increased business turnover and 37% forecast higher profits. Also, 77% of German companies expect increasing annual growth in their industries for the next five years.

Business confidence reached a historic low

“German companies have been plagued by China’s zero-COVID-19 policy. It has spoiled business confidence, market attractiveness, and business opportunities in 2022” summarizes Clas Neumann, Chairman of the German Chamber of Commerce in China | Shanghai. He adds, “geopolitical tensions put additional pressure on German companies and are causing decision-makers to re-evaluate their engagement in China.”

58% of respondents say that China’s attractiveness as an investment location is decreasing compared to other markets. Only 51% of German companies plan to increase their investment in China in the coming two years, a drop of 20 percentage points compared to 2021. Also, views on business opportunities are more pessimistic. For instance, only 30% of German companies rate growth in domestic consumption as a significant business opportunity compared to 68% in 2019.

China’s zero-COVID-19 policy was detrimental to business success in 2022

This year, 66% of German companies named the zero-COVID-19 policy as their main operational business challenge, a jump of 24 percentage points compared to last year.

61% of companies that did not plan to invest or decrease investment over the coming two years in the Chinese market named the expected continuation of the zero-COVID-19 policy as the main reason. Out of the 10% of companies contemplating a market exit, 72% said it’s because of COVID-19-related restrictions.

Regarding China’s recent covid-policy shift, Clas Neumann says: “The sudden end of China’s zero-COVID-19 policy is a game changer. German companies will quickly adjust their business operations to the new conditions to help overcome the expected COVID-19 infection wave and will be more optimistic thereafter for the year ahead.”

Diversification and localization are strategic directions

The headquarters’ response to the zero-COVID-19 policy and rising geopolitical tensions is a combination of increased diversification outside of China and intensified localization inside China. 77% of German companies’ headquarters have already adapted their strategy in response to China’s zero-COVID-19 policy. 70% are taking steps to mitigate the risks tied to geopolitical tensions such as an international sanctions regime. To build resilience, companies are localizing operations and supply chains inside China, diversifying in South-East-Asia, or simultaneously doing both. Larger corporations find it easier than smaller companies to build up parallel structures and diversify outside of China.

Cautious optimism for 2023

The year 2022 was bruising for German companies in China: only 24% of companies say that the development of their industry has improved in 2022, while 51% were forecasting a positive development when asked last year. For 2023, 38% of German companies are expecting to see a positive development. Clas Neumann concludes: “Despite all odds and challenges, China remains unrivaled in terms of market size and market growth opportunities for many German companies. The large majority will stay committed to the Chinese market.”

China’s policy makers need to act now

The German Chamber welcomes the Chinese government’s pivot away from the zero-COVID-19 policy. The new regulations must be well-planned and implemented in a structured manner on all levels throughout the country. German companies are committed to doing their share in managing the transition. Combined with leveling the playing field for domestic and foreign companies and a more transparent legal framework, this will help restore predictability, and business and investment confidence across all market players.

About the Business Confidence Survey 2022/23

Between August 23 and September 21, a total of 593 member companies of the German Chamber of Commerce in China responded to the survey, making this one of the most representative samples of German business sentiment in China.  The Business Confidence Survey was first launched in 2007 – it is the Chamber’s most important publication and the main tool and source of our advocacy work.

About the German Chamber of Commerce in China

The German Chamber of Commerce in China currently has more than 2,100 members and is the official member organization for German companies in China. By providing up-to-date market information and practical advice, the German Chamber helps its members to succeed in China. It offers a platform for the Sino-German business community and represents its members' interests toward stakeholders, including government bodies and the public.

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Previous Surveys

Media contact

Carina Mingle

Head of Media Relations &

Corporate Communications

Mingle.carina(at)china.ahk.de

+86 10-6539-6670

A better balance to strengthen the German economy

First and foremost, the German economy in China argues for creating a balanced relationship with the country: Despite increasing differences on systemic issues, China remains one of the crucial global growth markets and innovation drivers for the coming years. Engagement in China help to strengthen the innovative power and speed of German companies. Being successful in China means taking over a stronger position on the global market. Even though companies are aware of increased risks, are diversifying their businesses and making their supply chains more resilient, they cannot and do not want to miss this crucial growth market.  For this reason, the German government must continue to support German companies on the Chinese market - especially through personal meetings with government representatives on site in China - in order to reduce market access barriers and advocate for a level playing field. In addition, the German government should actively work towards ensuring that China implements the commitments already made in the negotiations surrounding the investment agreement with the EU.

Better equilibrated economic cooperation to strengthen German companies

Secondly, there is a need for an active and well-balanced economic cooperation with effective dialogue formats. Megatrends in Germany and China (such as in the areas of health, digitalization and nutrition) can serve as a substantive orientation framework for German-Chinese economic cooperation. New interest-driven dialog formats should be created without disregarding the fact that even meetings that are purely symbolic from a German perspective can be very useful as door openers. Taking into account the specifics of the Chinese politics, they can also help influence policy formulation on the ground. Bilateral cooperation formats are therefore important for companies to gain access to political decision-makers in China and thus make their concerns heard. In those fields in which the Chinese economy is advanced and competitive, targeted cooperation could support the transfer of knowledge towards the German industry. The German government should therefore actively support German companies – also with the help of the AHK offices in China – to establish sustainable cooperation in the interest of both sides.

New times call for new cooperation formats

Reciprocity must be the guiding principle for a readjustment of economic cooperation. Cooperation should take place when both sides equally benefit. A catalogue of guiding questions regarding added value, benefits and goals is essential for assessing the meaningfulness of cooperation. We would welcome if decisions on the continuation, creation or termination of cooperation and dialogue formats on specific topics and in particular formats involving German and Chinese companies were made on the basis of such a catalog of guiding questions. Participation in Chinese innovation and a transfer of knowledge to the German economy should be a focus. At the same time, an emphasis should be put on supporting diversification and resilience in the Asian engagement of German companies. Personal exchange at all levels is key to creating better understanding and effective cooperation between governments and companies. Both sides should work together to bring this exchange to life – possibly even before the publication of the China strategy.

Download the whole paper in German

The event was organized by AHK Greater China as part of its Competence Centre for Mining & Resources in China, that is funded by the German Federal Ministry of Economic Affairs and Climate Action (BMWK). Based in Beijing, the Competence Centre was founded in 2021 and serves as the first and central point of contact for German companies and institutions for an engagement in the Chinese mining and raw materials industry.

More than 150 representatives from German and Chinese ministries, public institutions, industry associations, companies and other stakeholders actively participated in the event.

During the presentations and panel discussion, high-ranking German and Chinese representatives and decision-makers from BMWK, German Mineral Resources Agency (DERA), National Development and Reform Commission (NDRC), VDI Center for Resource Efficiency (VDI ZRE), China Nonferrous Metals Industry Association Recycling Metal Branch (CMRA), Circular Economy Initiative of the Federation of German Industries (BDI), WirtschaftsVereinigung Metalle (WVMetalle) and the Association of German Metal Traders (VDM) as well as the companies European Metal Recycling, Guangdong Brunp Recycling Technology and Heraeus Metals provided insights into framework conditions and developments in the field of circular economy and discussed related potentials for raw materials supply and Sino-German cooperation.

Topics included existing dependencies on raw material imports, recovery and reuse of critical mineral raw materials as an essential element to increase supply security, as well as challenges and solutions in reducing primary raw material demand and increasing the use of secondary raw materials.

For further information, please do not hesitate to contact us:

Mr. Bernhard Felizeter
Head of Competence Centre for Mining & Resources
German Industry & Commerce Greater China
felizeter.bernhard(at)china.ahk.de
Tel: +86-10 6539 6650

Ms. Conghua XU
Project Manager of Competence Centre for Mining & Resources
German Industry & Commerce Greater China
xu.conghua(at)china.ahk.de
Tel: +86-10 6539 6653

With articles including:

• Decentralized Renewable Energy Supply in China – Status and Potential for the Energy Transition in Rural Areas
• China's Building Materials and Non-Ferrous Metals Sectors: Potential for Decarbonization and Inclusion in Emissions Trading
• China Strategically Advances Hydrogen Sector
• The Development of High-Speed Rail in China
• New Mobility and Green Finance in China – This Year's Conclusion of Seminar Series on China's Decarbonization Goals

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Read our previous issues