10. October 2014

Green Opportunities in China - Room for a German-Chinese Partnership in Advancing Sustainability Projects in China

Hamburg, 10 October 2014 – The Hamburg Institute of International Economics (HWWI) and BDO seek to raise awareness of the potential for German-Chinese cooperation in advancing projects in China. Chinese growth over the last two decades has been spectacular and unprecedented. On the other hand, rising living standards and industrial production have led to a degradation of the environment. The Chinese government has understood this to be problematic and a matter of public concern.

“For a number of reasons Germany and its companies are particularly well suited to benefit from these changing circumstances”, says PD Dr. Christian Growitsch, Director of the HWWI. In fact, China has in many ways imitated the successful German growth strategies by relying on industrial export-led growth. Furthermore, both countries hold outstanding positions in terms of the development of renewable energies and are heavily reliant on manufacturing. Germany has in the past addressed similar issues as China, albeit at a different scale. Particularly, due to their focus on Green technologies, German companies seem to be well suited to benefit from Chinese ambitions.

Currently, negotiations over the EU-China investment partnership are taking place, which would facilitate investments between these two economic powerhouses. Germany’s investments in China have been significant, but below what could be expected. This is in part due to regulatory restrictions and legal uncertainties (unfavorable institutional environment). “Since the expected returns on capital will likely remain relatively high in China for some time, removing some of these barriers could prove extremely beneficial to both countries. Additional German capital may find profitable investments in China, while China may benefit from associated knowledge spillovers in technology and environmental regulation”, says Growitsch.

China’s increasing importance in the global economy is retaining an enormous growth potential. Thus, the region offers significant opportunities for trade and investment both into and from Germany. Successfully establishing business in China requires thorough and in-depth preparation. “Investment in Greater China needs to be based on much more than the ‘usual’ business decisions as on an adequate corporate structure, an investment strategy or finding an appropriate location, says BDO’s head China expert in Germany, Kai Pingel. “It is imperative to really understand cultural diversity, the importance of personal relationships and the Chinese way of making agreements and doing business.”

Press release (PDF)

Presentation (PDF)