According to a survey of 300 German companies conducted by the German Chamber of Commerce in China feel threatened by local competition especially in the automotive manufacturing industry. Three out of four companies are facing challenges from competitors who have access to lower labor cost and more direct channels of distribution.
China remains one of the three most important markets for German automotive and mechanical engineering firms. The primary reasons for choosing China are market potential, following key accounts, presence in Asia and to lower production cost.
Amongst key challenges is finding and retaining qualified staff, plus rising labor cost. Preferred locations for German companies appear to be the Yangtze and Peal river deltas. For long-term success companies focus on improving their distribution systems.
Earlier this year the English People’s Daily Online reported the foreign companies will face new challenges like rising cost, inflation pressure, and renminbi appreciation, according to the annual China Enterprise Development Report released by the State Council’s Development Research Center. At the same time, foreign companies will also feel more pressures as China gradually ends the practice of “super-national treatment” under which foreign-invested enterprises had enjoyed more preferential policies than their Chinese counterparts since the beginning of the reform and opening-up, the report said.