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ticularly positive; it contributes to a balanced increase in the two states’ trade
exchange, and reduces the risk of major fluctuations associated with the procedures
of signing contracts with state institutions.
The total number of German companies operating in China is around
5000 37 . According to surveys which covered German entrepreneurs conducting
business in China 38 , the current number of German business initiatives
is estimated at 4500, a major part of which (60%) were launched
in the last decade. This was possible because a large number of small and
medium companies have entered the Chinese market, following their major
customers, and paved the way for others. Many German companies not only
sell their goods on the Chinese market, but also expand and modernise their
manufacturing plants located there, which has increased Chinese input in the
end products manufactured by German companies to 50%. There are relatively
few German companies which invest in China in order to export their products
later on. The average share of exports in the total sales is around 28%. So, China’s
contribution to manufacturing activities carried out in Germany is insignificant,
even including the supplies of sub-assemblies. China’s WTO membership
has proved favourable to German companies operating in China, leading
to a considerable reduction of non-tariff barriers to trade. Actions launched by
the Chinese government to combat corruption have also been assessed as positive,
even though the problem of corruption remains a major barrier to business
activity in China.
German companies prefer to establish their own branches instead of starting
joint venture initiatives. In this way they intend to maintain full control over
the business technology and know-how, possible decisions to leave the market,
and the division of profits. Germany fears conflicts with their Chinese partners,
limitations in decision-making, and the risk of technology leakage. The
decision to start a joint venture partnership on the Chinese market is often
motivated by political factors and hopes for a stronger support for this type of
companies by the authorities and local administration, as well as by the need
to limit the possible losses in case of a business failure.
PRACE OSW REPORT OSW 09/2012 11/2013
37
http://www.auswaertiges-amt.de/sid_2C6BB9502BB68DFB9F24F270313C3684/DE/Aussenpolitik/Laender/Laenderinfos/China/Bilateral_node.html
38
German Business Expansion in China 2008–2010, Results of a Survey Conducted among
German Operations in China Focussing on Market Potential Barriers to Doing Business and
Future Business Outlook, http://www2.china.ahk.de/download/pub/sample_German-
BusinessStudy.pdf
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