German firms eye bigger role in China's progress

BEIJING -- China's economic development will continue to prove resilient and German firms expect more participation in the reform process, said officials from the German Chamber of Commerce.

"China may not continue double digit GDP growth, but I would put my money on stable development of China's economy," said Joerg Mull, chairman of the German Chamber of Commerce in China and Executive Vice President of Volkswagen (China) Investment Co Ltd.

"Since I came here, I have heard about the possible collapse of China's economy every year, but it turns out China's economy is rather resilient," said Mull, who has been in China for six and a half years.

There are over 2,400 German companies in China, 60 percent of which are medium-sized or small, mostly in the automobile and machinery sectors.

German firms generally have confidence in the Chinese market with an improving investment environment, and will invest more in China next year, according to a recent survey by the German Chamber of Commerce in China.

German attitude toward China has been changing with China's rapid development, said Alexandra Voss, executive chair of the chamber in North China.

"At the very beginning, most German firms regarded China as a local business station, then used it as an export springboard into Asia, but now they all agree that China is the focal point in Asia with huge potential and their second home market," she said.

Challenges remain for Germans in China, with many firms facing rising wage bills and a shortage of talent.

Mull attributes growing labor costs to rising living standards, narrowing of income disparity and transition to a consumption-led economy.

To address talent shortages, German firms, together with Chinese governments, are introducing vocational training programs.

"Education has become a key strength of the Sino-German partnership," said Voss.

Other challenges include barriers in heavily regulated sectors such as banking, and the market is not open enough in some provinces, especially in infrastructure public procurement, Mull said.

Mull expects further opening up of regional markets and relaxation of some barriers after this weekend's CPC meeting sets out the reform agenda.

"But we have to be realistic about the speed of change," he said, "it is not like switching on and off a light. It will be evolution and you have to take a gradual approach to fine tuning."

Voss believed German firms have a lot to offer in urbanization, environmental protection, social security and medical service sectors as China strives to build a wealthy society.

German firms have realized they not only enjoy certain privileges in China, but also should share certain social responsibilities, as they try to integrate into the local society.

"German firms aim to be wanted in China, not tolerated in China," Mull said.