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German investors more cautious about China expansion, survey finds
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GERMAN investors have become cautious about expanding too rapidly in China and are more likely to focus on consolidating investments at existing operations this year, said a survey released today by the German Chamber of Commerce in China.
"Investment activity for 2014 is projected to remain similar to that of last year. For companies that are planning to invest in new cities, following customers and regional diversification are the most important reasons," according to the 2014 German Business Confidence Survey.
It found 47.1 percent of respondents planned to invest the same as last year while 45.3 percent said they would increase capital input in China. Only 7.6 percent plan to invest less this year, the survey said.
Also, 30.4 percent of the surveyed companies said they were set to invest in new locations, down 17.1 percentage points from 2013. This reflected the more cautious attitude towards rapid expansion and hinted at a consolidation of investments at existing sites, the survey said.
"China remains the most important source of growth for German companies," said Titus von dem Bongart, chairman of the board at the German Chamber of Commerce in Shanghai. "But companies are now experiencing more moderate growth rates, since their focus is shifting from rapid growth to increasing productivity."
According to the survey, more German companies reported increasing profits and employee turnover, but growth rates had been adjusted to lower levels. Investors in the automotive sector were an exception as they continued to hold a very positive outlook.
As for China's recent reform efforts, nearly 70 percent of respondents supported the policies including the increase of domestic consumption, environmental protection and measures to strengthen the role of the market. Respondents said the policies have the potential to affect their business in a good way.
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