Here's How German Companies are Faring in China

By Ryan Gandolfo, October 13, 2020

Game Theory is a regular series where we speak with a professional with insight into China’s business and tech scene.

Maximilian Butek arrived in Guangdong’s capital city in 2018 to take over the German Chamber of Commerce’s activities in South and Southwest China. Below, Butek share with That’s his role as Delegate and Chief Representative of Delegation of German Industry and Commerce in Guangzhou and how German companies are faring in the Middle Kingdom.

Maximilian Butek. Image provided by German Chamber of Commerce South & Southwest

What’s your typical day like at the German Chamber?
I don’t have typical days, which makes my job interesting. From morning till night, my team and I are in communication with German and Chinese companies, Chinese authorities and other institutions. We help our companies address their business issues of any kind, we support them in finding the right investment destination in China or Germany, we match them with relevant suppliers or distributors and offer professional trainings, such as vocational training for technicians or management training for CEOs. We are in constant contact with the authorities, on the one hand to solve actual and specific issues but also about further projects and concepts on how to enhance the Sino-German business cooperation.

What are some of the more common barriers you see German companies face when entering the Chinese market?
We are in a constant exchange with our member companies and on a larger scale also with the more than 5,000 German companies operating in the Chinese market. Most of them have been active here for decades. A lot has been achieved and German companies in China acknowledge the country’s commitment to further opening up, but despite many efforts to improve the market access, German companies in China are experiencing an implementation deficit. Market access and regulatory reforms should go hand in hand to improve overall business environment.

“We know that around every second German company in China has postponed or reduced their investment decisions for 2020”

How has your outlook on business in China changed since the COVID-19 pandemic?
Over the years, German companies active in the Chinese market reported stable investment plans. However, we could already see that growth in terms of net sales, profit, investment and employment has been slowing down since 2018. Investment confidence has thus come under additional pressure from COVID-19 as the crisis creates additional uncertainties. From our latest survey, we know that around every second German company in China has postponed or reduced their investment decisions for 2020. However, we can already see signs of recovery, German companies in China are cautiously optimistic. Still, reaching the pre-pandemic levels will remain a tour de force for all market players.

What kind of services does the German Chamber South & Southwest offer to member companies?
We see ourselves as a platform between our members, Chinese companies and the government for experience sharing, knowledge enhancing and business development. Often we are also a kind of safe harbor for members, knowing that they have a strong institution representing their interests on a daily and individual basis. We have a comprehensive ‘tool kit’ for that, and my colleagues are sound experts in their respective fields, always looking to find the best solution for any problem. Our platform in Greater China extends to 12 offices, but we are part of a worldwide network with 140 offices in 92 countries, and with that we are globally one of the biggest Chamber organizations in the world. This not only materializes in joint projects, but also in a very practical way.

How has your view of economic relations between Germany and the Chinese mainland changed since joining the German Chamber?
The longer I am here, the more I understand that Sino-German economic relations are more complicated as they appear from the outside. The relations are strong, deeply rooted and decades old. German companies are committed, not only to the Chinese market, but also to their employees and their communities. To highlight this, one initiative is our program ‘More than a Market,’ where German companies showcase their commitment to improving the communities they are acting in. From a business angle, German companies are known for taking decisions rather slow. This makes it sometimes challenging when operating in a different system, where people seem to choose a ‘trial-and-error-approach’ over considering the consequences that actions might have in the long term. In many cases, this approach has proven to be successful. Nevertheless, this often leads to misunderstandings, especially to those who are not yet well experienced within the Sino-German business climate. We see our organization as a bridge builder: To act as a mediator, translator and connector.

This interview has been edited for brevity. To follow the German Chamber of Commerce South and Southwest, scan the QR code below: