B&R initiative, innovation providing new opportunities
Investment exchanges between China and Germany have been increasing in recent years, with the Belt and Road (B&R) initiative and "Made in China 2025" strategy bringing new opportunities.[Special coverage]
Greatview Aseptic Packaging Co, a Chinese provider of aseptic packaging materials and related services, built its first factory outside China in 2013, in Halle, Germany with an investment of 50 million euros (.82 million), creating 180 jobs for the city.
Bi Hua, CEO and executive director of the company, told the Global Times on Monday that his company chose this location because of the local government's strong support for foreign investment and its connection to the European market as a whole.
Thanks to the China-Europe cargo trains and the B&R initiative, the revenue of Greatview's international business increased 28.7 percent in 2016, according to Bi.
"Due to soaring orders from Germany and France, Greatview's factory in Germany soon reached capacity shortage. As it takes almost two years to build a new factory and improve capacity in Germany, we decided to transfer orders in Europe to our factories in China. Fortunately, we learnt that under the framework of the B&R initiative, the fees for trains between China and Germany have been cut to almost the same as ocean shipments while the delivery time has been shortened by two thirds," he said. The company is considering further expanding its capacity in Germany and creating 110 additional jobs, he said.
Chinese investment in Germany is on the rise, as can be seen with Midea Group Co's acquisition of Kuka AG. Data from Germany Trade and Investment showed in May that Chinese companies invested 281 projects in 2016, an increase of 48 percent from 2014. Sectors including industrial manufacturing, medical and environmental protection technologies attract the most investment, according to media reports.
For example, domestic pharmaceutical firm Luye Pharma Group acquired German medical firm Acino AG in November 2016. The deal will help "introduce high-quality manufacturing systems and advanced production concepts into China," Jiang Hua, vice president of the group, told the Global Times on Tuesday.
Though it may increase competition from Chinese companies as China moves toward more innovation-driven development under the "Made in China 2025" strategy, competition provides incentives for companies to innovate and increase their efficiency, said Li Yuan, professor of East-Asian Business and Economic Studies at the Institute of East Asian Studies at the University of Duisburg-Essen.
Opportunities in China
"China will become a larger market for high-end German products and investment with the increase in size of the Chinese middle-class," Li told the Global Times over the weekend via e-mail.
A number of high-tech German companies like Dental Material-Gesellschaft (DMG), Volkswagen and Hella have established operations in China, bringing cutting edge technologies to the country.
Dental material manufacturer DMG entered the Chinese mainland in 2001 and has since expanded into Hong Kong, Macao and Taiwan.
Wang Yingtao, head of the group's Beijing Representative Office, told the Global Times that DMG has decided to invest more and to set up a company in China to produce and sell goods in Southeast Asia.
"The B&R initiative and a series of tax cut measures and decentralization policies have brought new development opportunities, which is the main reason why DMG decided to increase its investment in China," Wang said.
The B&R initiative is expected to enhance regional integration across Eurasia, which would offer German suppliers more scope for participating in the "Asian Factory" through cross-border value added chains, Li said.
Volkswagen Group China told the Global Times that it is working closely with Chinese companies like Mobvoi and JAC on new mobility solutions. The company hopes to be even more Chinese and strengthen its efforts in localization, it said.
German automotive parts supplier Hella entered China in 1982 and now has more than 5,000 employees in the country, the company told the Global Times on Tuesday.
"We believe that the Chinese market will continue to grow, although at a more sustainable and slower rate than in the past years," the company said.
"[Germany's] potential trade and investment relations with China are far from being fully achieved, mainly due to restrictions, bans, and other institutional barriers," Li said.
Li noted that the governments of both countries should enhance policy coordination and work together to lower institutional barriers and transaction costs.