The German-Chinese Trade Quagmire

The German-Chinese Trade Quagmire

Germany has been Europe’s leading economic pillar in the recent years. One of its essential revenue sources is its trade partnership with China. In the past few years, for instance, it sold millions of vehicles to China making it the top car exporter from the region. One of Germany’s influential firms is the Bauer Group, an engineering and construction company that has invested heavily in China. Recently, with the new rule of China’s president Xi Jinping, the honeymoon seems to be over. Deutschland AG advised on the need for any German investor seeking to invest in China to take caution regarding such business decisions. 


What Caused the Addiction? 

Thomas Bauer, Bauer Group CEO remarked that Germany erred in putting nearly all its eggs in the China ‘basket’ instead of investing in different markets. Germany was the first European country to begin investing in China and has since grown to be the largest. As a result, most of its products found a market in China, therefore, causing the over-dependency. The market trends are now changing with the entrance of powerful investors such as the United States and restrictive policies from Xi’s government. 


Back to the drawing board 

Previously, Germany has been dominating the aerospace, robotics and automotive manufacture market in China. The situation is currently under threat following Xi’s strategy to manufacture the machinery locally. There is an urgent need for Germany to intensify digitalization to produce different products to cope with future threats. This situation has led to a significant number of German investors withdrawing from further investments in China. The situation puts both the Germany investors as well as the Chinese authorities in a dilemma on whether to abandon the long relationship they have had. It is now time for Germany to consider other markets as well as products diversity.

Date: 11 May 2018, 10:05 am
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