German companies in China may be running out of time to form partnerships with Chinese firms expanding internationally, according to a report published on Thursday by the German Chambers of Commerce Worldwide Network (AHK).
Executives from various sectors had consistently indicated that the window for such partnerships was narrowing, according to the report released by the body representing German corporate interests in Beijing.
One cited problem is that Chinese companies are learning fast and pursuing their expansion ambitiously.
"I think the next 18 months are a golden window to partner up," the chamber quoted an executive at a German automotive supplier as saying.
According to the report, Chinese firms are rapidly acquiring the capabilities they currently still need from German partner companies, while putting the global business models of German companies under pressure through fast decision-making, low costs and a willingness to prioritize market share over short-term profit.
The trend of German companies in China seeking to ride the wave of Chinese firms' expansion is not new. In the AHK's most recent business climate survey, 542 polled German companies rated the internationalization of Chinese firms as their most important business opportunity.
For its latest report, the AHK discussed the trend with 11 unnamed member companies between April and June, from sectors including automotive, mechanical engineering and logistics.
Examples include German companies providing products and services for the Chinese partner company's international business, or help with meeting international standards, according to the report.
Through such partnerships, German companies in China aim to remain relevant in global markets and offset declining local demand, the AHK said.
German companies' knowledge of other markets and the trust their brands command there helps Chinese firms, the report said. Chinese companies are heading abroad partly because domestic demand remains persistently weak.