Dusseldorf’s Pro-China Strategy

Since 2004， the number of en- terprises China has invested in Dusseldorf has tripled. This is attributed to Dusseldorf’s “proChina” strategy， which aims at providing investors with customized and oneto-one service guidance to help them adapt to the local conditions and step onto the track. So far， Dusseldorf has become a region in Germany with the fastest growth in the number of Chinese enterprises， revealed Uwe Kerkmann， Director of the Germany Dusseldorf Economic Promotion Bureau， in an interview with China’s Foreign Trade.

Uwe Kerkmann talked about why it was a wise choice for the Chinese enterprises to invest in Dusseldorf. With a fast-growing GDP and lots of enterprises， Dusseldorf is very dynamic in economy. In 2004， Dusseldorf developed the “pro-China” economic development strategy and set up a Chinese Affairs Center to facilitate the Chinese investors and to provide a string of considerate services and consulting programs. By far， more than 300 Chinese enterprises have invested in Dusseldorf， such as Huawei， ZTE and China Minmetals， the biggest iron and steel company in China and the first to set up subsidiary in Dusseldorf. As early as in 1980， China Minmetals Europe began to successfully conduct business in Europe. Striving for better operation， Huawei moved its European operation headquarters to Dusseldorf from London， which has brought sound development for the company. Besides， Dusseldorf is the capital of Nordrhein-Westfalen， a big State in central Germany. Dusseldorf has convenient ocean， road and air transport as well as a mature highway system and easily-accessible shipping with Rhine. Moreover， the city is equipped with sound supporting financial infrastructure， and in recent years China has gradually perfected its relevant financial facilities—Bank of China as well as Industrial and Commercial Bank of China have set up branches in Dusseldorf， which offer great convenience for the Chinese enterprises in Dusseldorf.

Geng Dongping， General Manager of the most representative China Minmetals， told the reporter why China Minmetals chose Dusseldorf as the first investment destination to set up branch office. “First， it’s about the geographical location. Dusseldorf is located in central Germany， near to the country’s biggest industrial center Ruhr， so it is convenient for us to visit our important clients and to transport our goods to them quickly.”As one of the flight hub in Europe， Dusseldorf can be accessed by non-stop flights from every major European city. The highspeed railway is consummate across Germany. Hong Kong and Shanghai Banking Corporation(HSBC)， the major bank for our cooperation， is headquartered in Dusseldorf. Many of China’s big banks have also set up branches in Dusseldorf.“Another important reason is that the Dusseldorf government has been greatly supporting us all the time. Without the help and support from the Dusseldorf Economic Promotion Bureau， we cannot understand and meet the requirements to set up a company in Dusseldorf. Nor can we overcome the difficulties for application for the first time. So far， the Dusseldorf government has been very friendly to us. As some of our employees are directly sent from other overseas countries to Germany and we need to frequently host Chinese teams， we have always had contact with the State Administration of Foreign Exchange and the Labor Bureau， which always do their utmost to help us within the bounds of laws，” said Geng， when he appreciated the support of the Economic Promotion Bureau. According to Geng， the Chinese Affairs Center of the local Economic Promotion Bureau specialized in providing services for the Chinese investors not only at the beginning of the establishment of the enterprises but also in the process of operation.

Annette Klerks， employee from the Dusseldorf Economic Promotion Bureau told the reporter that since 2007， Dusseldorf has become a zero-tax city， which is very rare. Compared with other German cities， Dusseldorf has a lower trade tax rate as well as a lower industrial and commercial tax rate. Thus， the Chinese enterprises may increase their profits by about 15.4%. Besides， Dusseldorf has cut its housing property tax for seven consecutive times， which makes it much cheaper for the domestic enterprises to invest and conduct business in Germany.

Regarding the problems that the domestic enterprises have to pay attention to when invest in Germany， Dusseldorf’s officials， lawyers and the Chinese entrepreneurs have proposed suggestions from various perspectives.

According to Stephan Ulrich from Simmons Law Firm， it is of great importance to know clearly how to employ local employees， what kind of contracts to be used， how to legally dismiss employees and whether there exists trade union or other organizations before investing in overseas countries. In terms of working visa， Dusseldorf’s municipal and administration office may offer some support， which makes it much easier to send employees to Dusseldorf from China.

Manager Geng holds that it is the first step that costs troublesome， so the initial preparation is crucial and the enterprise is supposed to have definite objective and extensive market research for entering a new market. For instance， “we’re engaged in manufacturing wind power spare parts. Germany has developed machinofacture in the international market and at the same time we have many target customer base in the German market. Therefore， it’s quite easy for us to make choice. As a matter of fact， we have already had potential clients or existing clients in the German market， which is quite helpful for our future business conduction.”After making an initial business proposal， we may entrust experienced law firms， where the experts will give us better suggestions. With respect to market expansion， Germany is quite special， as it always has slow progresses and a long cycle. Thus， you have to be patient. But once connections are established， it will be a stable and long-term one as long as you do not have many problems by yourself. Regarding many enterprises’ worry about how to survive the market， Stephan Ulric holds that the enterprise had better choose a small yet new market segment and then try its best in that segment instead of a big and hot one. In the mean time， the enterprise has to focus on high-quality products and sound services. Only in this way can the enterprise survive the German market. As for whether to send employees from the

homeland or to employ locally， Wang Wei from KPMG said that the expatriates and local employees have their own advantages. For the expatriates， they well understand the company’s culture and products; while the local employees better know the local market and the local financial system. Why we are quite successful in investing in Germany， that’s because product managers are always Chinese people but salesmen are German. 1/3 of China Minmetals’ about 20 employees in Germany are Chinese and the rest 2/3 are German， which coordinate very well. As far as Wang is concerned， after observing so many cases for Chinese enterprises to invest in Germany and other overseas countries， I have learned that the successful enterprises are always practical and highly sensitive to culture. Just as Confucius remarked， once in a foreign country， you have to know its taboos and customs， which are open for us to learn about. Even the cultural differences can be gaped， as our human nature is the same. Last year， we sponsored a program in Germany and the young people studying in Germany told us about the differences between the Chinese and western culture. Thus， we can see that the cultural differences can be gaped and two different cultures can be well integrated.

As for the Chinese enterprises’ concern of what to do once things go wrong， Stephan Ulrich said that it is acceptable for the companies to exit the overseas market due to bad operation. “Above all， we have formal liquidation procedures， so you may declare bankruptcy or announce liquidation. Besides， you may also control insolvency liquidation via the bankruptcy behavior.” However， Stephan Ulrich reminded that the enterprise should not just focus on the short-term benefits of one single business but the long-term ones.