German firms cautious over fast growth in China
Print Edition
GERMAN investors turn cautious about expanding too rapidly in China and expect to consolidate investments at existing operations this year, a survey by the German Chamber of Commerce in China showed yesterday.
“Investment activity for 2014 is projected to remain similar to that of last year,” the 2014 German Business Confidence Survey showed.
The survey found that investments for 47.1 percent of respondents will be unchanged while 45.3 percent plans to invest more and 7.6 percent will cut their investments in China.
Also, 30.4 percent of companies are set to invest in new locations, down 17.1 percentage points from 2013. The drop reflected the more cautious stance toward rapid expansion and hinted that investments at existing operation sites would be consolidated, 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 in Shanghai. “But companies are now experiencing more moderate growth rates since their focus is shifting from rapid growth to productivity increase.”
The survey also found that although more German companies reported rising profits and turnover expectations, they have tempered their growth rates. But investors in the automotive sector continue to hold a very optimistic outlook.
Nearly 70 percent of respondents support China’s reform efforts as they predict rising domestic consumption, environmental protection and measures to strengthen the role of the market have a positive impact on their business.
Human resource issues continued to be the biggest challenge for German firms operating in China.
For the first time, 49 percent of German investors complained about the slow Internet speed in China.
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