PEKING (dpa-AFX) - German Chancellor Olaf Scholz must find clear words for companies from Germany during his visit to China, according to the German Chamber of Commerce Abroad (AHK). "The expectation, of course, is that we hope Chancellor Scholz will make the challenges we have here understandable," said Maximilian Butek, Managing Director of the German Chamber of Commerce in East China, in Beijing on Wednesday. The Chinese party leadership must understand at the highest level that German companies in China have problems. They were standing in the way of a further success story of the German-Chinese relationship in an economic sense.

Scholz could not address every problem in detail, Butek admitted. However, he expects a regular exchange between the authorities on both sides to be revived. According to him, trust must be restored between the governments of China and Germany so that problems can be discussed. The Chancellor will not only wear the German hat, but also the European hat to a certain extent, said Butek.

Three stops in China

On Saturday, Scholz will travel to the People's Republic for three days to meet China's head of state and party leader Xi Jinping. It is the chancellor's second trip to the People's Republic since taking office in December 2021. His inaugural visit in November 2022 was only a day trip due to the ongoing coronavirus pandemic. His trip begins in the central Chinese mega-city of Chongqing, which has a combined population of more than 30 million across its administrative districts. Chongqing is also the start of a freight train connection between China and Europe, which ends in Duisburg in North Rhine-Westphalia. According to Chinese figures, an estimated 60 trains reach the city in the Ruhr region every week on this route, from where ships transport the goods onwards via the inland port, for example.

Scholz is also expected to hold talks in the financial metropolis of Shanghai and the Chinese capital Beijing. He will also be accompanied by a delegation of business representatives. The problems that Germany has on its own market, for example due to cheap products from China, and those that German companies have in China, could also be discussed.

"Need support from politicians"

Many of the approximately 5,000 German companies have been criticizing the same difficulties in the market of the world's second largest economy for years. According to a survey by the AHK, around two thirds complained of unfair competition. "We can see that the issue of competitive conditions has a different priority than it had five years ago," said Butek. Chinese companies have caught up technologically. "That's why we now really need to have the support of politicians to start negotiations," he explained.

150 of the more than 2000 AHK member companies took part in the survey. The majority came from the mechanical engineering, automotive and business services sectors. Chinese private companies make up 52 percent of the main competitors.

According to the survey, companies face disadvantages such as more difficult market access. In addition, the government, local authorities and public tenders are more difficult for companies to access. Almost all respondents (95%) saw the increased competition as having an impact on their business and cited increased cost pressure, reduced profits and lower market share as the main consequences.

Strengths and weaknesses of the Germans

A previous survey had already made it clear that German companies see their Chinese competitors as innovation leaders in some sectors, such as the automotive industry. In China in particular, car manufacturers such as BYD are dominating the local market with their low-cost e-cars, in which German companies such as VW and Mercedes are also trying to keep up.

Despite everything, German companies saw themselves as having an advantage over their Chinese competitors in terms of product quality, technical leadership and innovative strength. However, the AHK survey also showed that Germans considered themselves weaker than their Chinese competitors in terms of cost efficiency, speed of innovation and the time it takes to launch a product on the market.

However, China is an indispensable market for a significant number of German companies, which is why many want to continue investing there - despite the German government's strategy of reducing the risk of over-dependence on China. "According to our surveys, around half of German companies have taken measures to mitigate risks from their China business," Butek told the German Press Agency. Risk management does not mean turning away from the Chinese market. Many companies are increasingly investing in localization - be it in China or in other markets worldwide, said Butek. For example, some company managements have decided to localize research and development in China. Others are increasingly working with local partners to make their supply chain less dependent on crises or changes outside China./jon/DP/stk