German firms see 'opportunities' in reform

China may be growing at a slower pace, but its focus on urbanization and green industries will offer "great opportunities," said an official from the German Chamber of Commerce.

The "strategic industries laid down in the current five-year plan will be very interesting for German companies in the next years," said Alexandra Voss, executive chairwoman of the German Chamber of Commerce, North China.

"Environmental technologies, renewable energy, modern information and biotechnology are all sectors where German companies with their know-how and experience are in a strong position," she said recently.

Consumer goods and modernizing healthcare are also sectors where German companies see market demand as China's middle class grows rapidly and purchasing power strengthens, she said.

China and Germany signed a raft of cooperative and investment agreements in late May. Premier Li Keqiang said during his two-day visit there that China will further its opening-up policy and offer more opportunities to German companies.

But Li said the world's second-largest economy is transforming its economy to more domestic consumption-oriented by deepening reforms.

Voss said German companies are upbeat about the prospects of the Chinese economy.

Germany has long been a major source of foreign investment in China, with a slew of global multinationals adding investment in recent years.

According to the Ministry of Commerce, China's foreign direct investment during the first five months of this year gained a mere 1.03 percent from a year earlier to $47.6 billion, but direct investment from Germany surged 57.3 percent year-on-year to $1.22 billion.

According to Zhang Yan-sheng, secretary-general of the Academic Committee of the National Development and Reform Commission, German companies have been very "firm" in investing in China during the past three decades since China launched the opening-up policy.

"There is a wide range of sectors where the two countries could cooperate with each other. As a nation that boasts strong competitiveness in technology and manufacturing, Germany sets a good example for China to learn from," Zhang said.

"China welcomes German companies and we expect more investment from the European country to flow into China."

In a survey of 2,500 companies in Germany by the Association of German Chambers of Industry and Commerce in April, China was ranked as investors' top destination, especially for those from the automotive, high-tech and machinery industries.

"The huge market that China owns and China's efforts to advance industrialization and urbanization is very appealing for Germany," Zhang said.

But Voss said German companies still see themselves confronted with a "number of challenges" in doing business in China, with the greatest one relating to "human resources".

"Companies continue to have problems with finding qualified personnel. Rising labor costs and high staff fluctuation rates are also what they have to face," she said.

Voss also cited "market entry barriers in several sectors" in technology, banking and energy, as another challenge.

"It remains a key mission for export-oriented economies such as China and Germany to contribute to an open framework for trade and investment," Voss said.

According to a recent survey by the European Chamber of Commerce in China, European companies are facing growing pressures in China as labor costs rise and the economy slows. What makes the situation even worse is the "discriminative supervisory environment" and "market barriers".