Business Confidence Survey
First launched in 2007, the Business Confidence Survey has been a key instrument for measuring the business sentiment of German companies operating in China. The survey is also the main tool and source of our advocacy work.
Ready, Set… Compete: Competitiveness Emerges as a Key Issue for German Companies in China
Published on January 24, 2024
Although 83% of companies surveyed think that China’s economy is facing a downward trajectory, 91% plan to continue doing business in the country. 78% are expecting consistent growth in their industry in the coming five years. 54% plan to increase investment with 79% saying that this is necessary to remain competitive in China.
Amid the emergence of strong Chinese competitors, the German Chamber of Commerce in China calls on Chinese policymakers to create a true level playing field for foreign businesses by implementing measures that promote fair competition and strengthen investor confidence.
Key Findings:
- Growth optimism amidst market slump: While 83% believe China’s economy is currently facing a downward trajectory, 64% view this as a temporary economic slowdown and predict a bounce back within the next 1-3 years. 42% of German companies expect a positive industry development in 2024, compared to only 21% in 2023. Furthermore, 78% expect consistent growth over the next five years.
- Competition triggers investments despite decreased overall attractiveness: Although 54% of companies believe that China's investment appeal is declining in comparison to other markets, an equal percentage are planning to increase their investments in the country over the next two years. 79% say that continued investments are necessary to remain competitive in China. Furthermore, 37% believe China’s attractiveness as an innovation market is increasing compared to other markets. 46% are planning to cooperate with local partners to stay competitive.
- China’s innovators challenge German companies: 5% of survey respondents currently regard Chinese companies as innovation leaders in their industry, but 46% foresee them becoming leaders within the next 5 years. In the automotive sector, 11% of companies view Chinese competitors as innovation leaders, with 58% expecting them to take on that role over the next 5 years.
- Regulatory challenges hinder competitiveness: 32% of respondents consider legal uncertainty as the most significant regulatory challenge. Additionally, 22% report experiencing unequal treatment compared to their local competitors. In particular, more than half (53%) of those who participate in public procurement encountered obstacles, such as a lack of transparency and ‘Buy China’ policies.
- Companies are ramping up risk management: 44% have taken steps to address potential risks linked to their business operations in China. Of these companies, 83% attribute their actions to geopolitical tensions, while 45% cite China's economic development as a key factor. Measures include building China-independent supply chains (45%), setting up additional operations outside China (40%), but also localizing R&D operations in China (34%).
About the Business Confidence Survey 2023/24
Between September 5 and October 6, 2023, a total of 566 member companies of the German Chamber of Commerce in China responded to the survey, making this one of the most representative samples of German business sentiment in China. The Business Confidence Survey was first launched in 2007 – it has been a key instrument for measuring the business sentiment of German companies operating in China and the main tool and source of our advocacy work.