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German companies operating in China are facing low business sentiment due to increased competition and China’s economic slowdown, according to the German Chamber of Commerce in China.
A survey conducted by the commission showed that more than half of German businesses reported losses to the company this year.
Furthermore, only 32% expect any change by 2025, marking the lowest level of pessimism since the survey began in 2007.
Mr. Clas Neumann, chairman of the German Chamber of Commerce in eastern China, highlighted the difficulties encountered this year, which led to a negative revision of future expectations. Despite this, he noted that 92% of German companies are committed to continuing their presence in the Chinese economy.
Germany serves as China’s largest trading partner in Europe, with major companies such as Volkswagen (ETR:), BMW (ETR:), and Bosch (NS:) to have a lot of money in this country. This troubling sentiment among German companies is similar to what was reported by a British business survey carried out the day before, which also showed a sad picture.
Foreign direct investment (FDI) in China, although only a small share of the country’s total investment at 3%, has declined for two consecutive years. This shows a decrease in the confidence of foreign investors.
The agency’s findings show that 87% of the 51% of German businesses that plan to increase their investment in China in the next two years are doing so primarily to compete with local companies. This represents an annual growth of eight percent in the investment stimulus.
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