German enterprises double down on China investment amid growing global uncertainties

HEFEI - Rising tariffs from the United States are making it more challenging for German companies to export there, increasing the need for strengthening trade ties between Europe and China, according to Hermann Simon, a renowned German economist known as the father of the "Hidden Champions" theory.

"With tariffs coming from America, it's more difficult to export into America and we now have to intensify our trading relations between Europe and China," Simon told Xinhua in a recent interview.

"If we lose market share in America, we have to find it somewhere else," Simon said, adding that most German companies are quite successful in China and are satisfied with the results they have achieved in the country.

From March 23 to 25, Simon led a delegation of over 20 representatives from German enterprises and consulting institutions on a visit to the cities of Hefei and Bozhou in East China's Anhui province.

During the trip, the delegation toured new energy vehicle (NEV) plants, a traditional Chinese medicinal herb market, and an auto parts industrial park, seeking new opportunities for Sino-German collaboration.

"In respect of the tariffs in the United States, the Chinese market will be more important in the future because we need free trade in the world," said Hannes Schleeh, president of the International Hidden Champions Association, while adding that the Chinese market is an open market for German "hidden champions" -- which means they will invest and do more business in China in the future.

Experts have said that amid growing global uncertainties, China's ever-opening market and thriving emerging industries are attracting more German companies to double down on investment in China.

Notably, an overwhelming 92 percent of member companies of the German Chamber of Commerce in China planned to continue their operations in the country, underscoring the enduring importance of this market to German businesses, the chamber said in a survey report in December 2024.

Helmut Heuser, general manager of Wurth Electronic (Shenyang) Co Ltd, outlined his company's plan for the coming years. "We are investing more in China in production localization and project management, and I think there will be a lot of investment in the next 10 years here to stay close to our customers," he said.

"When we work closely with Chinese enterprises, it's actually a win-win situation," said Heuser, who has lived in China for more than 30 years.

Unlike Heuser, Klaus Benecke is new in China, but he was fascinated by the country's AI and software development technologies.

"We developed a data model, and I hope that we can now speed it up with Chinese developers," said Benecke, general manager of Benecke System, citing China's AI advancement such as DeepSeek.

Germany has made record investments in China over the past two years, particularly in establishing R&D centers. Simon observed that China has the best competence in many fields.

Michael Bose, head of the international department of Automotive Cluster Berlin-Brandenburg, highlighted China's remarkable progress in the automotive sector.

"Having closely followed the evolution of China's automotive industry, particularly in NEV development, for over a decade, I can attest that Chinese electric vehicles now demonstrate world-class technological levels. They meet German quality standards while pioneering cutting-edge intelligent connected vehicle technologies, presenting valuable learning opportunities for German automakers," Bose said.

Chinese manufacturers uniquely combine decades of automotive engineering expertise with groundbreaking software innovation, creating fertile ground for Sino-German collaboration, Bose added.

China will encourage foreign investors to increase their reinvestment in the country, and will ensure equal treatment for foreign-funded enterprises, according to this year's government work report.

A total of 59,080 new foreign-invested enterprises were established in China in 2024, an increase of 9.9 percent year-on-year. Over the past five years, the return rate on foreign direct investment in China has remained at approximately 9 percent -- ranking among the highest in the world.

"No matter how the external environment changes, China has always fulfilled its commitment to high-level opening up," said Chinese foreign ministry spokesperson Mao Ning earlier this month. "China welcomes foreign companies to invest and deepen their presence in China -- to share its dividends and achieve common development."