BIT to provide security for German firms in China

German companies have confidence in the Chinese market and will not leave as they see great growth potential, and a widely anticipated bilateral investment treaty (BIT) between China and the EU, expected to be signed by 2020, will provide them with investment security, a German business representative said.

German companies are here in China and here for China, as about 90 percent of them produce for the Chinese market, while only a limited number are focused on exports, Jens Hildebrandt, executive director of the German Chamber of Commerce in China-North China, told the Global Times.

“That means the Chinese market will be important for German firms in the future,” he said.

“There might be considerations about the distribution of management risk. So what we’ve seen for a couple of years is that additional capacities will be or have been built up in Southeast Asia with the ‘China plus one’ strategy,” Hildebrandt noted.

Many companies in China are looking to diversify their operations by adding another location in Asia, a strategy known as the “China plus one” model, according to media reports.

“German companies are following that, but it never means German companies are leaving China,” Hildebrandt said. “It just means they have additional capacities in Southeast Asia.”

The pandemic will still lead companies to take a closer look at supply chains, and it is still very important that the Chinese government makes strong efforts to advance reform and opening-up, said the business representative.

“German companies are still very positive toward the Chinese market,” he said. “They believe the Chinese market will be one of the most important growth markets of the future and this confidence stays with German companies.”

Germany is the EU country with the largest amount of investment and number of projects in China. There are more than 5,000 German companies seeking growth in China and about 60 percent of them are located in Shanghai, 30 percent in North China and 10 percent in South and Southwest China.

Photo: cnsphoto Deputies to the 13th National People’s Congress (NPC) take photo at the Great Hall of the People after the closing meeting of the third session of the 13th NPC in Beijing, Capital of China, on Thursday.