Fragen und Antworten

Due to its geographical size, China is characterized by cultural differences and socio-economic disparities. Thanks to the early opening to foreign trade and the resulting infrastructure, China’s east is significantly more developed than central and western China. The orientation towards coastal cities is not decreasing, but the provincial capitals and regional centers in the interior are also becoming increasingly interesting as locations and sales markets. With the “Go West” campaign launched a few years ago, the Chinese government is trying to accelerate the development of western China through infrastructure expansion and investment incentives. The goals are a balanced social development of the country and an improvement in the general standard of living.

The 13th Five-Year Economic Development Program aims to improve infrastructure in the western provinces, modernize industrial zones in the northeast and promote growth in the central provinces. The focus is also on three major regional initiatives: economic development, the integration of Beijing, Tianjin and the Hebei province surrounding both metropolises, and the expansion of the economic belt on the Yangtze, which extends over eleven provinces with 40 percent of the Chinese population.

Most German companies have settled in the Yangtze Delta around Shanghai, in the Pearl River Delta in the Hong Kong/Canton region and in the Bohai region around Beijing~Tia~jin. These regions will continue to exist. attractive locations for German investors. With the development of the central and western Chinese regions as a sales market, German companies are now increasingly following the “Go West” campaign. Regions such as Chongqing, Chengdu or Wuhan in the interior of the country, for example, are becoming increasingly interesting for German companies, also due to the good availability of personnel. The Chinese government is trying various measures, for example by expanding the infrastructure. This means that these regions are becoming increasingly important as investment locations for German companies.

German companies and brands have a good reputation in China. Chinese customers are particularly interested in consumer products “Made in Germany” or products from Europe. Tourism also plays an important role.

The accessibility of customer industries and the regional availability of suppliers are the most important basis for a location decision. High logistics costs can quickly become a price disadvantage. In addition to the reliable availability of energy, the availability of qualified personnel is also very important. Transport connections, cost of living and quality of life are other important aspects. The possibility of taking advantage of regional funding and tax breaks should only be a secondary criterion. Every company should check for itself whether it meets the requirements for discounts. The provisions of the government’s investment steering catalog are important, with the help of which the aim is to steer foreign investments in individual regions. China is working on a shift from previous quantitative industrial growth to high-quality, resource-saving growth. Compared to the 2011 Investment Catalog, the current version simplifies restrictions on foreign investments and reduces the number of restricted industries. Legal framework conditions, in particular their interpretation and application practice, can also change at short notice at any time. Due to the language barrier alone, there are often difficulties in accessing basic information in China. Medium-sized companies in particular are dependent on a strong network in order not to lose track.

After being founded in Shanghai, Guangdong (with an economic focus on Hong Kong), Fujian (focused on Taiwan) and Tianjin (for better trade with Beijing and Hebei) in recent years, the State Council approved the establishment of seven more pilots at the beginning of this year -Free trade zones: In Liaoning, Zhejiang, Henan, Hubei, Sichuan, Shaanxi and Chongqing. Within these zones, foreign investors can establish business locations in certain industries without being subject to country-specific investment restrictions for the respective industry. Further free trade zones are being discussed, for example to increase China’s competitiveness in the interior of the country. Large city clusters are expected to emerge in the coming years.

Fundamentally, it is not about the construction or development of new megacities, but rather about creating synergies for regional and division of labor development. Beijing and Tianjin are to merge with the Hebei province surrounding both metropolises into one economic unit: Jing-Jin-Ji (J)Ut X) with a total population of more than 100 million inhabitants. The aim is to give Hebei province a new boost in sustainable economic development, while Beijing is to be reduced to the so-called capital functions. As part of the development of this city cluster, the “New Economic Zone” Xiongan will be developed in the coming years southwest of Beijing and Tianjin Pudong developed in Shanghai in the 1990s. Xiongan is intended to become an example of modern, ecological and smart urban development.

Many “second-tier cities”, like the metropolises Beijing, Shanghai, Canton and Shenzhen, already have a well-developed infrastructure, international airports and interesting investment and business opportunities, often at an even lower level. These include Chengdu, Chongqing and Shenyang, whose Wuhan, Xinch are characterized by relatively advanced internationalization and an increasing number of foreign investments. They benefit from government stimulus packages and are experiencing rapid growth. Many of these cities are attractive as investment locations compared to the coast because they have lower costs for rent, electricity and labor. However, local authorities are often less familiar with dealing with international companies in everyday business, which can lead to problems. When investing in less centrally located regions in China, you should carefully examine the potential of the locations. It is to be expected that due to the Chinese government’s efforts to better distribute wealth in the country, an increase in wage levels and the cost of living can also be expected here in the medium term. In short, there is potential for growth, but often the infrastructure (including international schools and hospitals) is not yet as well developed and economic development is not yet as mature as in Beijing, Shanghai or Canton. Cities in the second, but especially the third and fourth tiers are therefore usually recommended for immediate market entry with an experienced partner.

The “German-Chinese” industrial parks are intended, among other things, to enable German medium-sized companies to enter the Chinese market. An innovative system of industrial parks is planned in which the party, government and companies will work together to realize the integration of industrial production with the latest information and communication technology. But models for saving energy and preventing environmental pollution are also being considered.