German companies gain confidence in China

Despite pessimism among many European companies, one German consulting firm in Shanghai says operating conditions are still looking good.

Hannes Basten is a client services manager for a German consulting firm in Shanghai. Over the past 30 years, his company has helped hundreds of European firms set up their businesses in China. He says that despite the slowdown in China, their business is doing well, and enjoying steady interest from European companies in investing here.

He said, "There's always companies interested in investing in China, and on the other hand we see that companies that are already here are rethinking their approach, for example, expand their regional coverage in China, so opening branch offices in other cities, or they are increasing the scope of activity so they add other manufacturing facilities or they add after sales service to their China operation."

Basten says there is a growing trend of "made in China, for China" companies that design and manufacture their products for the local market, because the export cost advantage of being in China is decreasing as labor costs go up.

He said, "We see more companies for example from the fields of medical technologies, environmental technologies, I think this is regarded as very promising fields in China."

According to a survey produced jointly by Fiducia and the German-China Business Association, German companies are generally confident about doing business in China, though they do expect a slow-down in their growth rate. Half the companies surveyed expect increased sales revenues of 11% or more, 15% expect declining sales.