German firms in China are generally upbeat about the outlook for the Chinese market next year despite downward economic pressure, a survey showed Tuesday.
German companies in China have said that the current economic situation is one of the most difficult in recent years. However, the overall outlook for the coming year is more positive, reflecting the confidence of German companies in the Chinese market and its recovery, according to a business confidence survey released by the German Chamber of Commerce in China.
The survey, which collected the opinions of 426 respondents, showed that companies now evaluate their increases in turnover and profit more cautiously than before. Moreover, the number of companies that increased investment and employment this year is at the lowest level since 2012.
Furthermore, one in four companies expect decreasing profits in 2016. The machinery industry is particularly affected.
For 2017, however, German companies are optimistic and expect economic development to take a more positive path and their company's turnover and profits to post stronger growth. An overwhelming majority of German companies have no plans to leave China.
Increasing labor costs and a shortage of qualified staff remain the main challenges for the majority of German companies operating in China. China's economic slowdown and domestic competition are concerns for German companies, according to the survey.
In the survey, German companies with production facilities in China were asked about the status and potential of Industry 4.0 for their operations in China.
A clear majority, about 83 percent, see the implementation of Industry 4.0 within their own production processes as a given. About 14 percent already apply intensive or partial use of related technologies. One in two companies is currently implementing or planning for it. The automotive industry is furthest ahead in this field.
The impact of the Chinese counterpart initiative, the "Made in China 2025" strategy is also evaluated positively. More than half of the German companies with production facilities in China regard its impact as positive for their company's operations over the next five years.