German businesses confident about Chinese market prospects

BEIJING, April 19 -- Undeterred by challenges facing global economic development, German businesses remain optimistic about their growth and cooperation prospects in China, which is Germany's leading trading partner.

SINO-GERMAN COLLABORATION

German materials manufacturer Covestro's enduring success in China stands as testament to effective Sino-German collaboration. The company is intensifying its commitment to the circular economy and decarbonization in China, one of its top markets, building on robust partnerships developed with a raft of stakeholders in China over the decades.

"The decision to expand in China post-global financial crisis proved to be a pivotal strategic move, supporting our global business growth, especially capitalizing on the thriving Asia-Pacific market,” said Markus Steilemann, chief executive officer of Covestro.

In the 1990s, Covestro's predecessor company Bayer MaterialScience strategically chose Shanghai as the place to build its integrated production site, with construction commencing in 2001. The company experienced rapid growth in the subsequent decades, responding to escalating demand amid robust economic expansion in China and the Asia-Pacific region.

In a bold move to fortify its presence in emerging economies, Covestro announced an investment of 1 billion euros to significantly expand its capacity at the Shanghai site in 2010, marking one of its largest single investments. A year later, the company also relocated the headquarters of its polycarbonates business unit from Leverkusen in Germany to Shanghai.

Covestro has consistently strengthened its presence in China. Another notable milestone was reached in 2020 when the Shanghai headquarters were upgraded with increased functions and business scope including management, innovation, operations, and investment.

Another Covestro plant in Shanghai, the first in the world to achieve large-scale production of mechanically recycled polycarbonates, was put into operation last year with an annual capacity of 25,000 tonnes, said Holly Lei, president of Covestro China, adding that Germany is leading globally in terms of circular economy technology, while China has many application scenarios amid the country's rapid progress toward its carbon emissions targets.

The company's collaboration with China spans diverse business operations, including R&D, manufacturing, and sales. By the end of 2023, its total investment in the Chinese market had exceeded 4 billion euros.

The Chinese market accounted for 20 percent of Covestro's global sales, and such figures tell us that the Chinese market cannot be ignored, Lei said.

As China continues its march towards modernization, it presents long-term opportunities for German enterprises. In the context of strengthened China-German economic and trade cooperation, both nations are actively pursuing partnerships in green development, transition and technologies.

"We are thrilled about the ongoing initiatives with our partners in China across various facets, which provide us with enduring opportunities," Lei added.

HEAVYWEIGHT DELEGATION

Senior German executives from more than 10 leading German companies recently paid a visit to southwest China's Chongqing as part of a heavyweight economic delegation.

The visiting executives held a meeting in Chongqing on April 14 and discussed cooperation in green development and technology.

These executives included Ola Källenius, chairman of Mercedes-Benz, and Oliver Zipse, chief executive of BMW, "underlining the importance of the Chinese market to Europe's largest economy," according to a Reuters report.

Sino-German economic ties should not only be cultivated but expanded, Källenius told German broadcaster ARD in Beijing on Tuesday. "Withdrawing from such a large market is not an alternative, but rather strengthening our position," Reuters cited him as saying about the company's strategy in China.

BMW's Zipse expressed a similar view on China, Germany's biggest trading partner. "We actually see more opportunities than risks," he told the ARD news program Tagesschau.

Investing here will expand the market for us and provide us with opportunities to bring more new products to Chinese consumers, said Markus Kamieth, designated chairman of BASF SE.

China is a country full of opportunities, and large Chinese enterprises are spread across the world, said Tobias Meyer, chairman of DHL Group, forecasting more cooperation opportunities in the logistics sector.

My company has been growing in China for more than 90 years, cooperating with local business partners across the country, said Belén Garijo Lopez, chairman of the board of Merck KGaA, adding that more major investments in China are likely.

BIGGER PICTURE

Chinese and German industrial and supply chains are deeply intertwined, and these markets are highly dependent on each other. Economic and trade cooperation has always played a key role in China-Germany relations.

Germany is China's largest trading partner in Europe, and the trade volume between China and Germany accounts for one third of the total trade volume between China and Europe, while Germany's investment in China accounts for one third of the EU's investment in China, according to China's Ministry of Commerce.

Meanwhile, the German Economic Institute revealed that direct investment from Germany in China had reached a record high of 11.9 billion euros in 2023, a 4.3 percent increase compared to the previous year. During the same period, German investment in China accounted for 10.3 percent of Germany's total overseas investment -- the highest level since 2014.

More than 5,000 German companies are thriving in China, and some 2,000 Chinese companies are developing in Germany, underlining the robust economic exchanges between the two countries.

Transformation not seen in a century is accelerating across the globe and economic globalization is facing a countercurrent. The so-called "decoupling and delinking" from China will only magnify global economic and trade risks.

The recent collective visit of senior German executives to China sent a clear signal that the more complex the international environment, the more valuable effective cooperation is.

The world is facing many challenges that no country can tackle alone, and German and Chinese companies should strengthen cooperation, said Roland Emil Busch, chairman of Siemens AG.

Mercedes-Benz's Källenius said China plays a pivotal role in Mercedes-Benz's global strategy, "serving not only as home of our largest market and one of our largest manufacturing sites but also one of our global centers for technological innovation."

Källenius also said that "in the future, we will continue to invest in China and strengthen cooperation with our Chinese partners," while adding that "we are delighted to open the brand-new building of the R&D Center Shanghai this month, which marks our local R&D's entrance into a new stage of 'Developed in China, Innovating for the World.'"

Source: Xinhua