The results of this blogpost in short:

  • Germany is an increasingly popular destination for Chinese foreign direct investment. 2016 so far has seen a record amount of Chinese investments in German industries with a 200% increase from 2015 numbers.
  • Until now, Chinese investment has predominantly had a positive impact on German businesses through factors such as improved access to the Chinese market and new job creation.
  • The exact influence of the Chinese government in those investments however, remains unclear due to a lack of transparency. The number of business takeovers by companies directly affiliated with the Chinese government has increased drastically over the last two years.
  • The Chinese government protects access to its businesses to a far greater extent than German businesses are protected by their government.


German technology is globally very popular – including in China. However, not everyone is enthusiastic about the interest being shown in it by the Middle Kingdom (i.e. China). Takeovers by Chinese firms are being observed with increasing skepticism and in some recent cases are even subject to government review. A study has analyzed Chinese investments of recent years and reached mixed conclusions.




Germany is an attractive target for foreign direct investments (FDI) from China. In particular, so-called “hidden champions” – companies that are not well-known to the public but due to their technological know-how are of great interest to international investors – are the focus of purchasers from the Far East. In 2014, 1.4 billion US dollar flowed from the Middle Kingdom to Germany (1.2 percent of total Chinese FDI). This meant that Germany was the third largest recipient country of Chinese investment in the EU (1st place: Luxembourg; 2nd place: United Kingdom). Although the 2015 figures show a temporary decline, with Chinese direct investment of only 409.6 million US dollar, 2016 appears to be another record year. According to the Chinese Ministry of Commerce, Chinese investments here in Germany between January and July 2016 have increased by 200 percent compared with the previous year.


Access to the German and European market, qualified workers, the acquisition of technology and the quality guarantee “Made in Germany” are important reasons for Chinese investments. As a highly developed country that has many companies with key technologies, Germany is also a focus of the so-called “Going Global Strategy” which was launched by the Chinese government in 2000 and promotes the FDI of Chinese businesses. At the same time critics argue that there is a possibility that this could lead to copycat technology or even industrial espionage.


Go West: Chinese direct investments can induce positive economic effects


However, what does the interim balance look like for German investments in Germany? Chinese FDI ventures are intensifying the economic relationship between Germany and China, bringing fresh capital into the country, and creating and sustaining jobs. Moreover a Chinese investor can make sense from a business point of view. “Many German businesses that have changed over to Chinese ownership in the last few years have had good experiences with their new owners. These include a long-term commitment to the location, guaranteed employment and improved access to the Chinese market,” explains Cora Jungbluth, economic expert at the Bertelsmann Stiftung and author of “Opportunity and Challenge: Chinese Direct Investments in Germany”.


China-Germany: No level playing field


However there are also critical aspects to Chinese takeovers. One considerable challenge is the uncertainty with regard to state influence. The formal ownership structures of Chinese businesses lack transparency and are a black box to outsiders. In addition there are a number of informal interrelationships between the state and the economy in China. Hence even Chinese private businesses cannot solely be considered economic players who are exclusively pursuing economic motives. Particular attention needs to be paid to the growing influence of businesses that are directly under the control of the Chinese government: whereas between 2003 and 2013 a total of ten of these businesses were involved in takeovers in Germany, in the period of only three years between 2014 and 216 there were also ten.


The second key challenge related to Chinese FDI is the lack of reciprocal equal treatment. Germany offers Chinese investors free market access and has no general protection mechanism for key technologies. In contrast, the Chinese government deliberately protects strategic industries from foreign access. This means that German businesses in China encounter numerous barriers, both formal and informal, and in comparison to domestic businesses are often discriminated against. Even 15 years after China’s entry into the WTO in 2001 there is still no level playing field in sight for German-Chinese economic relationships. “Here in Germany Chinese businesses enjoy relatively extensive freedom of movement. For German businesses in China that is not the case,” says Cora Jungbluth.


In principle both sides can profit from FDI. Key prerequisites for that to happen are open markets and fair competition conditions. If China, as one of the most important global players, systematically contravenes them, a fundamental solution needs to be found. The key lies in finding a path between a naive sellout of German and European interests, and protectionist actionism. Germany and the EU still need to find this path.