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German Business in China: Challenges due to market access barriers and trade conflict between US and China

German Business in China 2019/20

The survey by KPMG and the German Chamber of Commerce in China shows that German companies would invest more in China if the markets were more open.

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German Business in China

China is still one of the world's most important markets for German companies. This is the conclusion reached by the latest survey among members of the German Chamber of Commerce in China, which has now been published in the report “German Business in China: Business Confidence Survey 2019/20” by the German Chamber of Commerce in China in cooperation with KPMG in Germany.
 

German companies feeling the effects of the trade dispute   

However, there are currently two main factors holding them back:

  • 83% of the companies surveyed feel that they have been directly or indirectly affected by the trade conflict between China and the US.  
  • Ongoing barriers to market access in China, especially the implicit ones (e.g. licence requirements), are restricting growth potential for German companies: Two thirds of those surveyed feel affected.

While 45% of companies acknowledge the steps taken by the Chinese government towards reform and more open markets, many feel that these efforts fall far short of what is necessary. They are pinning their hopes on the “Comprehensive Agreement on Investment” (CAI) between China and the European Union.

The EU has been negotiating such a deal with leaders in Beijing for several years now. In particular, one of Europe's goals is to lower barriers to market access. 53% of the companies surveyed said that they would be likely or very likely to increase their investment in China if market access were to improve.
 

Three out of four companies will miss targets for 2019 

Right now, business is not going smoothly for German companies operating in the People's Republic. The deceleration of China's economic growth has been surprisingly sudden  - hence only one in four German companies in China (27%) expects to meet or outperform its targets for this year. However, forecasts have improved for 2020.

The survey by KPMG in Germany and the German Chamber of Commerce in China is the most representative of its kind in terms of the opinions of German companies in the People's Republic. Download “German Business in Chinahere:

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