Shortage of skilled labor biggest challenge: survey
The majority of German enterprises are not going to move out of China despite the economic slowdown, according to a survey released by the German Chamber of Commerce in China on Tuesday.
A large part of the 439 German companies participating in the Business Confidence Survey 2015 conducted by the chamber are easing into lower growth due to China's economic downturn, said Lothar Herrmann, chairman of the chamber and CEO of Siemens China, during a press conference held in Beijing Tuesday.
"Companies that have already been operating in the country are adjusting to new economic realities while maintaining their operations here," Herrmann said, adding that most surveyed companies held a positive view toward the prospects of their industries.
The survey indicated that German enterprises in automotive industry remain largely optimistic, with about 54 percent expecting conditions to improve in 2015. Overall, about 50 percent of companies are expecting to either exceed or achieve their business targets, the survey showed.
While some foreign enterprises are leaving the Chinese market due to rising labor costs, German companies are not shifting in the same direction because they are generally not interested in labor intensive industries, Shen Dayong, a professor at Shanghai University of International Business and Economics, told the Global Times Tuesday.
"German companies in China are usually investing in technology-driven sectors, such as automotive and high-end machinery, which require more talented employees," Shen said.
The German Chamber of Commerce estimated there were around 5,200 German companies operating in China in 2015, focusing on high-tech industries and modern manufacturing.
However, Herrmann noted that shortage of skilled employees is the biggest business challenge German companies will face in 2015. Over 82 percent of companies identified this issue as a challenge in the survey.
"I hope that German companies will become more engaged in China's initiative to upgrade its manufacturing sector," Herrmann told the Global Times Tuesday, noting that over 50 percent of the companies are expecting further localization of their research and development (R&D) in China.
Many of them believe finding qualified staff will be the major hurdle in expanding their R&D centers in the country, according to the survey.
About 65 percent of the surveyed companies expect new investments in manufacturing activities to come from the automotive, machinery and chemical sectors, indicating that German companies are dedicated to strengthening their position in technology-driven manufacturing sectors.
In terms of China's policies on foreign direct investment, Herrmann noted that some industries are still not fully open to foreign companies and sometimes there are regulatory delays in certain sectors. "For example, some foreign pharmaceutical companies encountered application delays when they introduced new products, which affected those companies' business plans," he said.
