中国德国商会-2017-2018德国在华企业商业信心调查报告（英文版）-40页-1mb

Summary of German Business Confidence Survey 2017/18

Core Content

The German Chamber of Commerce in China conducted its annual Business Confidence Survey in 2017/18, collecting 423 valid responses from its 2,400 member companies, representing about 50% of German firms operating in China. The survey focused on business outlook, market conditions, investment climate, and the Belt and Road Initiative (BRI).

Main Points

Economic and Business Outlook

• German companies' economic outlook has improved since 2016, with machinery/industrial equipment showing the strongest recovery.
• Over 60% of companies expect to exceed or achieve their business targets in 2017 and 2018.
• Turnover growth is strong, but profit, employment, and investment remain cautious, not reaching the high levels of 2014.
• The automotive and business services sectors maintain optimism for 2018.

Market Environment, Reforms, and Policies

• The Chinese market is still important for German companies, though its significance has decreased slightly.
• Nearly 40% of German companies feel less welcome in China than before, while only 6.2% feel more welcome.
• Economic reforms since the Third Plenum in 2013 have not had a significant impact on most companies.
• Expanding domestic consumption is seen as a positive reform, but capital flow restrictions are a concern.
• The Made in China 2025 strategy is viewed positively by around half of the companies for the next five to ten years.
• Bilateral relations are considered extremely or very relevant by 58% of respondents, with market access and a level playing field being a top priority for the new German government.

Business Challenges

• The top business challenges are human resources and internet issues.
• Over 80% of companies face problems with finding qualified staff and rising labor costs.
• Two-thirds of companies report issues with slow cross-border internet speed and access restrictions.
• Domestic competition is a major challenge, with over 40% expecting Chinese competitors to become innovation leaders within five years.
• Regulatory hurdles, legal uncertainty, and protectionism are also among the top challenges.
• Customs issues and capital transfer problems are significant obstacles.
• Uncertainty remains around the impact of the new Cybersecurity Law, with one-third unsure and one-fifth expecting a negative impact.

Investment Prospects

• Only a quarter of companies plan to invest at new locations in China within the next two years.
• The most common investment locations are Jiangsu, Guangdong, and Sichuan/Chongqing.
• Over half of the new investments in 2018 are expected to be in manufacturing facilities and staff development.
• Market growth expectations and strategic considerations are the main reasons for not investing, while regulatory issues are also a concern.
• Companies are not confident in the further opening of China's market, with only 40% optimistic about the medium-term outlook.

Research and Development (R&D)

• Over 40% of German companies in China conduct R&D locally.
• R&D is also planned by a quarter of companies for the next two years.
• Concerns about intellectual property and technology transfer are key reasons for not engaging in R&D in China.
• China has become a more attractive R&D location, with fewer companies citing lack of local expertise or unfavorable research environments.

Belt and Road Initiative (BRI)

• Over one-third of German companies see a positive effect of BRI on their future business, while more than half report no significant effect or no opinion.
• 30% of companies are active in or considering BRI projects.
• The main areas of involvement in BRI are automotive, construction, and logistics, accounting for over 50%.
• Nearly half of the companies involved in BRI are already implementing or planning concrete projects.
• The most frequently cited reasons for not engaging in BRI are low relevance to the company’s industry and lack of suitable projects.

Key Information

• Company Profile: Most German companies in China are Wholly Foreign-Owned Enterprises (WFOEs), and the majority are small to medium-sized enterprises (SMEs) with fewer than 250 employees.
• Industry Focus: Machinery/industrial equipment is the largest German industry in China, followed by automotive and business services.
• Location Concentration: German business is concentrated in the Yangtze Delta, Bohai Economic Rim, and Pearl River Delta.
• Investment Trends: New investments are more likely to be in manufacturing and staff development, with regulatory concerns being a major barrier.
• Regulatory Environment: Companies are increasingly affected by regulatory and legal challenges, with the Cybersecurity Law being a source of uncertainty.
• BRI Engagement: While not all companies are engaged in BRI, the initiative is seen as a potential opportunity, especially in construction, logistics, and automotive sectors.