German companies in China

Chinese vision of German companies.

In recent years, there have been many stories about German companies spreading among different Chinese social networks. One such story comes from the social network site WeChat in which a German company built a drainage system in Qingdao 100 years ago and predicted the problems that would happen 100 years later. The company in response stored the necessary parts in the drainage system in order to fix the future problems. Another story is about the metro system in Shanghai. Metro Line 1 was built by a German engineering company and the cost was much less than Metro Line 2, which was designed by a Chinese company. The cost for air condition system of Line 2 still has not been paid in full and is costing more than the original budget. Although most of these stories have been proven to be fictional or have been exaggerated, it still shows how Chinese people view German companies. Chinese people value the rigor of German’s attitude and the durability of their products.

German companies competitiveness in China

Germany is a powerful developed country with many competitive industries, such as automotive industry, electrical industry, mechanical equipment industry, chemical industry and renewable energy industry. And as we know, that most of the world-wide companies in these fields are German companies, for example BMW, Siemens and Bayer. These companies entered the Chinese market decades ago and are beloved by most Chinese people. They have already developed a good trading system targeting their Chinese customers. Therefore they have taken a huge part of the market share and have huge competitive advantages, like good reputation and technique. And considering their years of experience in Chinese market, they know the demands of the clients sometimes better than the local companies.

Entering China market

As a rapidly developing country, China has a huge potential market. Besides those MNCs, there are also lots of German SMEs, who want to set up cooperation with Chinese companies or sell their products to China. But in view of lacking experience and understanding about Chinese market, they are facing lots of problems when promoting their products. It is hard for Chinese people to accept those foreign brands that they never heard before. The reason is mostly because of the local trust issues and the big fake goods market. In addition, the local protectionism, high customs duty and instable legal system could also be big obstructions for them. In order to minimize their business risk and let them adapt in Chinese market, there came out lots of international trading and consulting companies. With their help, even some small German companies were able to start their business in China successfully. And with the good quality of their products, gradually it became easier for those German companies to expand their business in China.

German companies focus on quality and high-value in China

For German companies, their competitive advantage in China could not be the price but the quality and reputation. With the high customs duty and expensive labor price, their price could not be able to compare with the local companies. But if they can keep their good quality and reputation, their products can meet the success in this big market. And there will always be more German companies trying to open the gate to this eastern market.

See also: list of German companies in China / German chamber of industry and commerce / The Economist