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By Dai Qi

The German Chamber of Commerce released its German Business In China report recently, unveiling that around two-thirds of German companies plan to further invest in China within the upcoming two years.  

"The percentage of those planning to completely leave the market is as low as 1.1 percent. A further 9.6 percent do consider such measures but do not have specific plans yet," says the report.

Regarding the most favorable areas for investment, the report says staff development and training are the main areas for financing. "A notable share of respondents furthermore plans to invest in sales, marketing and business development, new manufacturing facilities as well as Research and Development."

Increased labor cost is the main reason for the one-third of respondents who do not plan to invest in China within the next two years, according to the report. Other reasons include the expectations of a slower growth rate in China, the lack of regulatory transparency, predictability and impartiality as well as increased domestic competition.

Compared to last year, the report says German companies are more optimistic that measures will be taken by the Chinese leadership to further opening its market for foreign direct investments (FDI).

"Half of the companies expect a further opening up, which is 10.2 percentage points above the 2017 level," says the report.

Since 2007, the German Chamber of Commerce in China's Business Confidence Survey has been a key instrument for measuring the business sentiments of German companies operating in China. 

As of 2018, the German Chamber of Commerce in China has approximately 2,400 member companies, representing about 50 percent of the German companies operating in China.