Chinese firms in Germany face growing coronavirus headwinds

By Zhang Dan Source:Global Times Published: 2020/3/19 21:33:40

A BMW i8 plug-in hybrid sports car at the first China International Import Expo (CIIE) in Shanghai. (Xinhua/Xing Guangli)

An increasing number of Chinese companies in Germany have seen their revenue shrink and their business prospects grow dim, and some may leave because of growing uncertainties, a survey by the Chinese Chamber of Commerce in Germany found.

How long the novel coronavirus persists in Germany and how long the country's restrictive policies to curb the virus are maintained constitute the biggest uncertainties for Chinese firms, Duan Wei, the chamber's chief executive officer, said in an interview with the Global Times. 

Some German partners have halted their cooperation with Chinese firms, and many projects have been delayed or canceled due to the pandemic, he noted. 

About 20 percent of Chinese companies in Germany are involved in the country's renowned auto industry, with the majority providing components to large auto plants.

Volkswagen, the world's biggest automaker, recently announced its European factories are suspending production. Another German auto titan - BMW - said on Wednesday it will close its European and South African factories, which account for half of its monthly output, while competitor Daimler reported production interruptions in its German and European plants.

"If auto plants in Germany suspend production and no longer require parts from Chinese companies, there is a possibility some will shift their business elsewhere," Duan said.

A brake pad provider for trucks in Central China's Hubei Province told the Global Times the company's orders from Europe dropped by 10 percent for March and April so far.

"The halt of German automakers' production will definitely give us a shock," a sales manager surnamed Hu at Hubei Feilong Friction and Sealing Materials Co said. 

To stabilize the economy, the German government has provided 1 billion euros ($1.1 billion) of credit for companies and announced a series of tax reductions to ensure their cash flow. But Duan warned that many private Chinese merchants would still feel great pain. 

Chinese companies in the German services industry, including those in the tourism and exhibition sectors, will operate at a low level in the first half of the year. Hanover Messe, an industrial technology trade fair, has been postponed due to the virus. 

In 2019, bilateral trade between China and Germany hit 205.7 billion euros, the Xinhua News Agency reported. China has remained Germany's most important trading partner for four consecutive years, and is of particular importance to the country's machinery, auto and chemical engineering sectors. 

According to Duan, Germany is making efforts to delay the peak of the outbreak so that its health care system is not overburdened, and beds in hospitals are sufficient for incoming coronavirus patients in serious condition. 

The country's 16 regions have shuttered schools and daycare facilities, and the federal government has advised people to reduce their movements. 

"The situation is serious. Take it seriously," said German Chancellor Angela Merkel during a televised speech to the nation on Wednesday. "Not since German reunification, actually, not since World War Two, has our country faced a challenge that has required such a high degree of common and united action."

Merkel urged all Germans to follow the rules and warned that a lockdown was still possible, the likes of which have already been implemented in Italy, France, Spain and Belgium.

"Some say the virus will not be eliminated in Germany within a short timeframe and may even persist for one to two years," Duan said. "If so, it would pose great challenges to all firms in Germany, including those from China."

Germany has the fifth-highest number of confirmed coronavirus cases in the world, according to the Johns Hopkins Coronavirus Resource Center, with 12,327 cases and 28 deaths. 

It is notable that Germany has so far succeeded in keeping its coronavirus mortality rate low compared with other countries, partly due to its strong healthcare system, Duan said.

He added that the potential for cooperation between China and Germany is huge due to Germany's world-leading pharmaceutical industry and biomedicine development and China's established experience and research in fighting the new coronavirus. 

"German's coronavirus situation, prevention and control work is the best in Europe at present," Zhang Wenhong, director of the department of infectious diseases at Huashan Hospital said in a panel discussion with China's Consulate in Dusseldorf, Germany, adding the largest economy in Europe has adopted a correct strategy so far. 

Newspaper headline: Uncertain road ahead for auto sector


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