Why German companies flock to a Chinese town

Some German entrepreneurs see China's market as a "gym" where multinational companies can experience rapid growth through both competition and cooperation.

German investment in China accounted for 10.3 percent of the country's total overseas investment in 2023, the highest since 2014, reported the German Economic Institute.

NANJING/BERLIN, April 4 (Xinhua) -- If one comes to Taicang, a booming town of Suzhou, east China's Jiangsu Province, and takes Bus Route 103 to travel in the city's Hi-Tech Industrial Development Zone, one can easily find many bus stops named after German companies including Kern Liebers, Trumpf, Haering, Tox.

The bus starts its journey on Nanjing East Road in Taicang at "Kern Liebers Station," traversing four kilometers and connecting over 40 German companies. The bus route strings together an entire supply chain, making it convenient to gather all the components required for a new energy vehicle's electric propulsion system.

Such an observation may shed light on why the pragmatic and prudent Germans choose to flock to China's market.

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Since the early 1990s, Taicang spent 14 years attracting its initial 100 German investors, but it took the city only three more years to attract another 100 German enterprises. It is often said that one could manufacture a car without ever leaving Taicang, as 70 percent of the required auto parts can be sourced from the city.

Kern Liebers was among the first German companies to recognize Taicang's business potential. Starting with a 400-square-meter rented factory and a team of six employees in 1993, this major producer of car seat belt springs has since embarked on 11 successive rounds of investment in Taicang. Today, its Taicang facility spans 70,000 square meters and generates an annual output value of around 1.5 billion yuan (over 207 million U.S. dollars).

The success of Kern Liebers in Taicang made a big splash in Germany, with over 500 German enterprises currently setting up operations in the city.

From a sales office to a company covering production, R&D, sales and services, Chiron Group, a leading German company in machine tool manufacturing, has expanded its Taicang factory three times in size since 2012.

"We have a big trust in China and especially in Taicang to continue our business. Our forecast looks quite stable for 2024; we want to have around 20 to 30 percent growth," said Willi Riester, CTO of Chiron Machine Tool (Taicang) Co., Ltd.

Data from numerous German research institutes show that Sino-German economic and trade cooperation has bounced back amidst growing global trade tensions, with an increasing number of German enterprises accelerating their presence in China.

German investment in China accounted for 10.3 percent of the country's total overseas investment in 2023, the highest since 2014, reported the German

Economic Institute, saying that German companies still deem China as a huge buoyant market and plan to increase their business.