Chinese investors should be welcomed in Germany

BERLIN -- Investments from China have helped create jobs in Germany and positively affected economy, thus should be welcomed, a German think tank said on Monday.

In its study named "Departure for the West--Chinese Direct Investment in Germany", the Guetersloh-based Bertelsmann Foundation found that with a rapid growth, Chinese investment had helped protect vulnerable jobs in insolvent companies and created new opportunities in Germany.

"The fear that they will destroy jobs is unsubstantiated," the study report read.

China's annual investment abroad has increased rapidly from $0.9 billion in 2000 to $65 billion in 2011. Between 2003 and 2011, the annual direct investment from China to Germany rose from $25 million to $512 million.

The Bertelsmann Foundation expected that by the year 2020, Chinese investment in Germany would be tripled from the level of 2012 to $2.1 billion.

However, unlike investors from Western industrialized countries, Chinese firms in Germany face suspicion and sometimes even rejection, the study found.

This would be particularly the case when it came to acquiring German companies. There were concerns that skilled jobs would be withdrawn to China, and the Chinese government might have an influence on Chinese companies investing abroad.

"The growing presence of Chinese companies in Germany is a normal phenomenon," said the report, "Historically, companies have always been internationalized and increasingly investing outside their home market, if their competitiveness and financial strength reached a certain level."

Among Chinese companies which acquired German firms, the share of state-owned enterprises is declining in recent years. Since 2009, the majority of Chinese investors are privately-owned companies.

By acquiring German companies, Chinese investors could get improved expertise, distribution channels and an enhanced reputation, while the company being acquired often benefits from improved market access to China and the supply of fresh capital.

Earlier this month, Technische Universitat Munchen and the Munich Innovation Group found in another study that most of new owners from China engaged in productive collaboration in research and development in German companies.

More than 75 percent of Chinese investors chose to strengthen German research and development departments, instead of relocating the know-how to Asia after they took over German firms. In many cases, German management teams were retained.

"Chinese investments have positive effects on German industrial added-value. They should therefore be welcomed in Germany," said Bertelsmann, adding that the German government should not introduce stricter controls on foreign direct investment and should oppose such efforts at the EU level.

"Restriction of this type contradict the basic idea of an open investment regime, which is vital for Germany as an export nation," said the foundation.

It urged the German government to hold talks with a strict schedule and clearly defined intermediate goals with China's new government on the issue of mutual investments. With a good bilateral relationship, both sides could have a better chance than ever to make their concerns heard, said the foundation.