German investment shows confidence in China

Foreign companies' unshaken confidence in China can be reflected by their expanded investment in Taicang, a county-level city in Suzhou, Jiangsu province, which is known for the cluster of small and mediumsized German enterprises.

In late July, Schaeffler AG inked a cooperation agreement with Taicang High-Tech Development Zone, under which the German rolling element bearings and auto parts provider will build a project for new energy vehicles' key parts and aviation bearings in the zone.

With a total investment of $300 million, the new facility is another step forward for Schaeffler since it set its first footprints in Taicang in 1995. Over time, the German company has built six factories, one mold-manufacturing facility, one special equipment production unit, one German-style dual-system training center and one comprehensive center here, with the total headcount exceeding 7,000.

This has made Schaeffler the largest German manufacturing company in Jiangsu province. The company's annual sales revenue came in at 19 billion yuan ($2.6 billion) in 2021, and is expected to top 21 billion yuan this year.

According to Zhang Yilin, CEO of Schaeffler Greater China, the new project is part of the company's efforts to address the Chinese auto industry's transition toward new energy vehicles as well as the rapid development of the Chinese aviation industry.

According to Mao Yaping, secretary of the Party working committee of Taicang High-Tech Development Zone, cooperation with German companies has always been a highlight of the zone, which is also part of Taicang's efforts to carry out opening-up at a higher level. Deeper cooperation with German companies will also help the zone to realize high-quality economic growth, she said.

China-Germany joint venture United Automotive Electronic Systems Co Ltd held the launch ceremony of the second phase of its Taicang branch in early July. With a total investment of 1.5 billion yuan, the 56,000-square-meter new project is scheduled to complete construction in the second quarter of 2023, by which time the annual sales revenue of UAES Taicang will come in at 6 billion yuan.

UAES' Taicang branch is a major supplier for major carmakers including General Motors, Volkswagen, Nio and BYD.

A total of 443 German companies have set up businesses in Taicang, with six of the top 10 German machine tool companies having set up operations in the city.

As explained by Taicang's Party secretary Wang Xiangyuan, no single German company has left the city since strip and wire parts maker Kern-Liebers became the first German company in Taicang in 1993.

Hu Chunchun, an associate professor from Shanghai Academy of Global Governance and Area Studies at Shanghai International Studies University, said the many SMEs nurtured in Germany have become the "invisible champion" in various industries.

Different from large corporations, these SMEs attach greater importance to the overall environment when they expand investment in China, and that is one appeal of Taicang, he said.