German firms seeking growth in China(3)

Labor shortage

To combat the labor shortage starting from the end of 2010, Foehl is determined to increase automation at his plant this year.

"It has already been decided to complete the automation of all major production processes. All the investment has been included in the budget. And it is not included in the 10 million machinery investment mentioned above," said Xue.

The Germans are far-sighted. They have long seen the potential of the Chinese market. Take Foehl Taicang for example: The board of directors approved without any hesitation their 7.5 million euro capital increase plan in 2008, when the financial crisis was at its most severe.

"Our two parent companies, one based in Zurich and the other in Stuttgart, are only a 40-minute flight from each other. But ever since the Taicang plant was established, they have flown all the way to Taicang every time they hold a board meeting. They have focused totally on the Chinese market," said Xue.

The local administration also aims high. Da Wenmin, director of the Economic Development Bureau of Taicang Economic Development Area, said they are working to introduce more small- and medium-sized German companies to the area to bring the total number up to 200 by the end of this year.