2017-2018德国在华企业商业信心调查报告（英文版）_38页_1mb

Summary of the German Business Confidence Survey in China (2017/18)

Core Content

The German Chamber of Commerce in China conducted its annual business confidence survey in 2017/18, which included 58 questions and collected 423 valid responses from its 2,400 member companies. The survey aimed to assess the business sentiment, challenges, investment outlook, and engagement with the Belt and Road Initiative (BRI) of German companies operating in China.

Main Views and Key Information

Economic and Business Outlook

• Recovery from 2016: German companies' economic outlook has improved from the low forecasted in 2016, with a strong year in 2017 and optimism for 2018.
• Industry Performance: Machinery/industrial equipment industry is the largest and most optimistic, followed by automotive and business services.
• Business Targets: Nearly two-thirds of companies expect to exceed or achieve their business targets in 2017, with similar expectations for 2018.
• Turnover and Profit: Turnover growth rebounded significantly, but profit, employment, and investment have not returned to 2015 levels.
• Investment Caution: Despite optimism, companies remain cautious about investment and employment, with the automotive industry being the main driver of investment increases.

Market Environment, Reforms and Policies

• Market Significance: The Chinese market is still important for German companies, though its significance has decreased slightly from previous years.
• Government Reforms: While reforms have been welcomed, most companies feel they have not had a notable impact. The expansion of domestic consumption is seen as a positive reform.
• Capital Flow Restrictions: Nearly 40% of companies report a negative impact from recent capital flow restrictions.
• Made in China 2025: Around half of respondents have a positive view of the strategy's long-term impact, though opinions are more divided over the next ten years.
• Bilateral Relations: 58% of companies consider bilateral relations extremely or very relevant to their future business. Market access and a level playing field for foreign businesses are seen as urgent priorities.

Business Challenges

• Top Challenges: Human resources (lack of qualified staff, rising labor costs) and internet issues (slow cross-border internet speed, access restrictions) are the top challenges.
• Domestic Competition: Chinese competition is a growing concern, with over 70% of companies reporting increased competition from mainland China.
• Regulatory Hurdles: Legal and regulatory issues, including unclear frameworks, customs obstacles, and capital transfer problems, are major concerns.
• Cybersecurity Law: One in five companies expects a negative impact, while one in three is unsure of the law's effect. Over half claim the law has not affected them so far.
• Visa and Permit Issues: Companies face difficulties in obtaining and renewing visas and working permits for foreign employees, with higher qualification requirements and unclear regulations being the main issues.

Investment Prospects

• Investment Plans: Only a quarter of companies plan to invest in new locations within the next two years, with Jiangsu, Guangdong, and Sichuan/Chongqing being the most common regions.
• Financing Sources: Reinvestment of earnings is the primary source of investment financing, with over two-thirds of investments relying on this.
• Investment Types: Over half of new investments in 2018 are expected to be in manufacturing facilities and staff development.
• Reasons for Not Investing: Market growth expectations and strategic considerations are the main reasons for not increasing investment, while one in four cite legal and regulatory concerns.

Research and Development (R&D)

• R&D in China: Over 40% of German companies conduct R&D in China, with a slight increase in interest over the years.
• Reasons for Not Engaging: Companies not conducting R&D in China cite a focus on German R&D and concerns about intellectual property and technology transfer.
• Positive Shifts: The perception of China as a location for R&D has improved, with fewer companies citing a lack of local technical expertise or an unfavorable research environment.

Belt and Road Initiative (BRI)

• Engagement with BRI: 30% of companies are active in or considering BRI projects.
• Reasons for Non-Engagement: Low relevance to the company's industry and lack of suitable projects are the main reasons for not participating.
• Project Status: Nearly half of those engaged in or considering BRI projects are already involved in concrete projects, while 55% do not have a specific project idea yet.
• Project Locations: China is the main location for BRI projects, but a quarter of companies are also involved in projects in Southeast and Central Asia, as well as Europe and Africa.

Conclusion

The survey highlights a cautiously optimistic outlook for German companies in China, with a focus on the recovery of the Chinese economy and industry performance. However, ongoing challenges such as regulatory uncertainty, human resource issues, and internet restrictions remain significant. While investment and R&D activities are still prevalent, companies are not as aggressive as before, and the BRI is seen as a secondary opportunity with mixed impact. Overall, the survey underscores the importance of continued policy clarity and market access for German businesses in China.