New investors cautioned of complicated laws, taxation
Chinese companies are making big investments in Germany, eyeing the country’s advanced technology and management, a senior Chinese commerce official said.
“The value and the amount of Chinese investment in Germany are both rising quickly,” said Meng Fanzhuang, minister counselor for commerce at the Chinese embassy in Germany.
Embassy figures show that about 2,300 Chinese companies are investing in German industries – such as finance, aviation, telecommunication and machinery – with a total investment of more than $4 billion.
Apart from setting up traditional trading firms, manufacturing bases and service companies, more Chinese investors are building research and development centers, bolstered by Germany’s outstanding talent reserve and technologies, Meng said.
More Chinese investors are trying to make their ventures fit better into the local business environment. For instance, they dispatch a handful of executives to Germany for decision-making, financial management and other essential tasks, and employ local workers to prime the pump, he said.
Meng said the financial crisis that began in 2008 forced some German companies into difficulties – such as financing or finding the company’s successor – to sell out to or team up with foreign companies, including Chinese ones.
Cao Yi, a media officer with Germany Trade and Invest, a promotional agency set up by the German government, said the Chinese government’s support for companies’ outbound investment is an important catalyst for the steadily increasing Chinese investment in Germany.
Chinese enterprises are also eager to expand their turf and create brand-names in the international market, she said.
“Made-in-Germany is a good label for them,” Cao said, adding that Chinese investors also covet the well-trained German workforce.
Hong Gang, executive chairman of Greatview Aseptic Packaging, said the traditional high-caliber training system in Germany guarantees the quality of the labor pool.
“German workers are very prudent; they pay attention not only to the outcome, but also to the process,” he said.
Greatview opened a packaging base in Germany with an investment of 50 million euros ($68 million) in 2011 and added an investment of 33 million euros on a second production line in 2013.
Meng Fanzhuang, minister counselor for commerce at the Chinese embassy in Germany.
However, for newcomers to the country, Meng cautioned that there are always difficulties. He suggested companies fully assess the risks and integrate the investment operation with the company’s overall overseas strategy.
It is also noteworthy that Germany provides preferential policies for companies doing business in eastern Germany and other less-developed areas. Investors can benefit from subsidies through communication with local government, he said.
“I also suggest Chinese companies hire local consultants or law firms because German laws and the taxation system are very complicated and can be a major challenge,” Meng said.
Meanwhile, German direct investment in China, particularly automation, digitalization and environmental protection, has also been booming in recent years.
More than 8,200 German companies have invested an accumulated $20 billion in China, according to the embassy.