Date
17 August 2017
Tourism powers the German economy more than cars. Photo: Bloomberg
Tourism powers the German economy more than cars. Photo: Bloomberg

Germany pitches brand beyond iconic cars

German luxury products are starting to attract a growing number of Chinese consumers but beyond the occasional purchases by mainland tourists visiting the country, these brands struggle to get noticed elsewhere.

Hong Kong is one such place.

Consul General Nikolaus Graf Lambsdorff said German luxury brands should try harder to establish a presence in the city and the region.

“There are about 30 mid-sized German companies producing luxury goods. I know their names but you probably do not. We are going to work on this,” Lambsdorff told a business conference in Hong Kong on Monday.

Lambsdorff is also promoting Germany as a brand, beyond its global reputation as home to the likes of Mercedes-Benz and BMW cars.

We would like people in Hong Kong [and the region] to discover the German economy. German businesses have a lot to offer.”

Germany has always been an exporting country but in recent years, it has seen increased spending by foreigners thanks to its burgeoning tourist industry.

“We welcome foreigners — tourists, migrants and investors,” he said. We are enjoying unprecedented growth in tourism which has contributed to our GDP [gross domestic product] more than the car industry,” he said.

Lambsdorff said Chinese tourists have been coming to Germany in increasing numbers. At the same time, Chinese investment is picking up.

Investors should take a close look at these developments, especially in the eastern part of the country where new infrasture projects are sprouting, he said. Eastern Germany enjoys lower labor cost than the rest of the country.

China is already the largest source of foreign direct investment in Europe. Mergers and acquisitions (M&A) deals involving Chinese entities are expected to continue to grow, notably in the industrial, material and consumer retail industries, Eberhard Brodhage, general manager Commerzbank, the second largest German lender, said.

A number of Hong Kong-listed firms are buying into their German counterparts amid growing bilateral ties. Pacific Andes International Holdings Ltd. (01174.HK) and Li & Fung Ltd. (00494.HK) are just two of them.

Recovering eurozone

Chinese companies did about 20 acquisition deals for European assets during and before 2009. By 2013, the number had surged three times, Commerzbank data shows. Last year, half of the deals were on industrial projects, followed by consumer retail assets.

China opened a chamber of trade and commerce in Berlin on Jan. 16, its first in Europe, hoping to further strengthen economic ties with German industry, online German news outlet The Berlin Global reported on Friday.

With the green shoots of recovery emerging in the eurozone, the timing could not be better.

“The uncertainty over the European debt crisis has largely worn off while companies and private households are still in the process of deleveraging,” Brodhage said. It may take at least one or two more years for the uncertainty to dissipate, he said.

He expects Germany’s economy to expand 1.7 percent this year compared with less than 1 percent forecast for the euro area.

All this assumes a stable political and social environment which Lambsdorff said are necessary for the economy to succeed. “Majority of the economic reforms started 10 years ago now give us an advantage,” he said.

In 2003, Germany cut taxes, relaxed job protection rules, offered financial incentives for the jobless to take work and revamped its unemployment and social welfare benefits.

– Contact the reporter at [email protected]

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Ayishah Ma is a financial reporter on Greater China issues.

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