Majority of German firms feel unfair competition in China, commerce chamber says

By Thomson Reuters Apr 10, 2024 | 2:07 AM

BERLIN (Reuters) – Nearly two-thirds of German firms feel they encounter unfair competition from local firms in China and are outgunned in terms of access to local officials, information and licences, a survey by the German Chamber of Commerce in China said on Wednesday.

German firms feel they still have the edge when it comes to the quality of their products and the ability to innovate, but feel under price pressure from their Chinese rivals in a way that eats into their profits, the survey said.

Only 7% of German firms felt they had better access to local authorities, compared to 58% believing that Chinese firms had better access. Some 8% felt they had better access to obtaining licences while 30% thought Chinese firms had better access.

The survey was published ahead of Chancellor Olaf Scholz’s trip to China this week, with companies pressing for what they characterise as fairer access to the Chinese market and Europe worried about Chinese excess capacity flooding its market.

The trip is Scholz’s first to China since Berlin drew up a China strategy last year that urged a “de-risking” to reduce economic exposure to the world’s second-largest economy.

Beijing in March made a renewed pledge to treat foreign companies in the same way as their domestic peers in a bid to attract more investment, but the move was treated sceptically by German businesses who said they wanted to see concrete steps.

Germany has become increasingly wary of tethering itself to a country it has described as both a partner and a systemic rival, in particular after Russia’s invasion of Ukraine in 2022 laid bare Europe’s reliance on Russian gas shipments.

Scholz will take with him chief executives from the likes of Siemens and Mercedes, underscoring Beijing’s continued importance.

Wednesday’s survey also showed that 95% of German firms felt that increased competition from Chinese companies was affecting their business, including 70% who felt it was eating into their market share.

A separate survey this week showed that the German economy is still highly dependent on China for a number of products and raw materials despite efforts to diversify.

(Reporting by Andreas Rinke and Matthias Williams, Editing by William Maclean)