German machinery producing success

German companies remain optimistic about their operations in China this year, especially those in the machinery sector, according to a business confidence survey by the German Chamber of Commerce.

In addition, 42 percent of the companies perceive the economic environment is improving.

China is the second-largest investment destination for German machinery manufacturers, as specialized machines bring necessary high-tech solutions to China's many challenges in urbanization.

Investment by German mechanical engineering firms in China increased six-fold between 2004 and 2012.

"When looking at the German-Chinese machine building industry, we can say that it was a continued success story," Reinhold Festge, president of VDMA, said at a press conference on June 26 in Beijing.

VDMA - whose English name is the German Engineering Federation - represents 3,100 member companies.

Accounting for sales of 205.8 billion euros ($285.5 billion) and representing 986,000 employees in 2013, mechanical engineering is one of the largest industrial sectors and employers in Germany. Roughly two-thirds of German production is exported. 

The VDMA covers the entire industry chain - everything from components and factories to service providers, system suppliers and integrators.

VDMA established a representative office in Beijing in 2004.

Bilateral trade between Germany and China in the machinery sector then totaled about 70 billion yuan ($11.2 billion), which by last year increased to 166 billion yuan - an almost nine-fold surge.

It makes China the most important market for German machinery and factories worldwide.

Germany's machinery and equipment sector is the largest and strongest in Europe, yet it is dominated by the small and medium-sized companies that form the backbone of Germany's innovative economy.

As well, deliveries from China to Germany are growing consistently. Germany has been by far the most important partner of Chinese machine builders in Europe for years.

Between 2004 and 2012, direct investment by German engineering companies in China grew from 5.7 billion yuan to almost 40 billion yuan.

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