Source: CD    Published: 2022-10-11

Growth in trade provides huge opportunities in array of industries for both countries

Trade in services between China and Germany, empowered by pursuing factors such as cross-border e-commerce, consumption upgrading and digital technologies, is expected to maintain robust growth in the coming years as business activities continue to expand, said experts and business leaders.

Focusing more on opening-up in trade in services, green growth and digitalization, China's huge demand will not only help emerging businesses conduct innovative activities in its markets, but also encourage importing technologies and services for high-end manufacturing, energy and carbon reduction, said Zhang Wei, chief researcher of the Beijing-based China Association of Trade in Services.

The enhanced cooperation in trade in services between China and Germany — two major exporters of industrial goods and investors for outbound direct investment — will create strength and stability to ensure supply chain operations around the world, he said.

In contrast to goods trade, trade in services refers to purchase and sales of services. According to the World Trade Organization's definition, trade in services covers a number of sectors.

These include commerce, construction and related engineering, finance, retail and distribution, entertainment, culture, sports, tourism, education and environment.

Prompted by rising exports of human capital-intensive services, consumers' surging demand for high-quality imports of foreign services and the further integration of traditional manufacturing and modern services, the value of China's trade in services jumped 20.7 percent on a yearly basis to 3.39 trillion yuan ($489 billion) in the first seven months of 2022, data from the Ministry of Commerce showed. After launching a number of services since the beginning of this year, DHL Express, the German express service provider, said that it will continue to further expand and enhance its logistics infrastructures in China.

Several projects have been undertaken and delivered presently, including building a regional hub in Chengdu, Sichuan province and the gateway in Zhengzhou, Henan province, and operating a new air route between Shenzhen, Guangdong province and Leipzig, Germany, said Wu Dongming, CEO of DHL Express China.

"China has been Germany's largest trading partner for years and bilateral trade has maintained strong growth," he said. "This is also reflected in our own business. We have seen a rise in the shipment volume between the two countries, for both imports and exports over the past three years."

As this year marks the 50th anniversary of the establishment of diplomatic relations between China and Germany, Wu said the German company will continue to promote the trade flow to and from China with the rest of world through its logistics services.

The executive noted that DHL Express will continue to leverage its global logistics network to promote the trade flow generated from cross-border e-commerce business between China and other parts of the world, as the sector will play a key role in economic growth in China. The country has also introduced a series of favorable policies to provide new impetus to import and domestic consumption.

Wu's thought is shared by William Yang, general manager for China of German sportswear and skiwear manufacturer Willy Bogner GmbH& Co, who said that the Munich-headquartered company plans to establish an offline business network of about 80 retail stores in China in the years ahead.

Thanks to the successful hosting of the Beijing 2022 Winter Olympics and people's soaring enthusiasm for winter sports, Chinese consumers will become more aware of and participate in ice and snow-related sports.

Bogner will provide consumers with more shopping options from urban life to outdoor sports, especially skiing, with innovative, high-quality and fashionable products, he said.

After establishing a number of brick-and-mortar stores in Beijing, Shanghai and Suzhou, Jiangsu province, the company will continue to focus on top and second-tier cities over the next three years.

"We believe that market opportunity in China is far greater than the challenge. The larger the market, the more leading brands can get a larger share," said Yang, adding that ski brands will also tend to be centralized in China. If the positioning is ambiguous and there are many brands with similar positioning around it, there will be stronger competitors to beat it.

Over the past decade, China's strength of having a super-large market has become more apparent. The accumulated import value of services has surpassed $4 trillion, said Wang Dongtang, director-general of the department of trade in services and commercial services at the Ministry of Commerce.

"A huge upside still exists in the development of trade in services in China. The scope of this sector has extended to artificial intelligence, the metaverse and other fields, with huge potential and strong growth momentum," said Lawrence Jin, head of Deloitte's global Chinese services group.

China started a three-year pilot program to promote innovative development of trade in services in 28 pilot areas, including Beijing, Tianjin, Shanghai, Hainan province, Dalian in Liaoning province and Qingdao in Shandong province, the Ministry of Commerce announced in late August.

Five adjustments to regulations in the pilot areas have been approved by the State Council, China's Cabinet.

They involve expansion of market access in the sectors of tourism, commercial franchises, patent agency services, trade in technology and exhibitions.

Driven by growing exports of telecommunications equipment, electric vehicles and smartphones, many Chinese companies such as China Railway Rolling Stock Corp and Xiaomi Corp have also built innovation facilities and service and marketing networks in Germany to provide warehousing and after-sales services.

Chinese electric vehicle maker Nio shipped the first battery swap station to Germany in late September.

It was produced by the Nio Power Europe Plant in Biatorbagy, 20 km west of Budapest, Hungary.

Nio will supply battery swap stations to its entire European network from its plant in Hungary later this year.

This will help with building service facilities in markets including Germany, the Netherlands, Sweden and Denmark, creating a solid foundation for local battery swapping and charging services, said Zhang Hui, vice-president of Nio's European branch.

Clas Neumann, senior vice-president of German cloud services company SAP, said that "China has always been an important part of the world's industrial supply chain, providing goods and services with high quality to the world and helping businesses around the globe to operate efficiently".

With the government seeking to join the Digital Economy Partnership Agreement and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, these moves will further bolster the growth of trade in services and provide foreign companies with greater transparency and certainty in all related fields, said Wang Wen, executive dean of the Chongyang Institute for Financial Studies, which is part of Beijing-based Renmin University of China.