The contingency and inevitability of “Town of German enterprises”

A small southern town, why will be favored by German enterprises? How did “Town of German Enterprises” come into being?

In the view of Zhang Zhenwei, who has stepped down as president of Kern-Liebeus and transferred to the chairman of Taicang European Chamber of Commerce, Taicang “town of German enterprises” is not government planning, but market operation, “its formation has both contingency and inevitability.”

Contingency refers to the first German company to settle down. Zhang Zhenwei analysis, in Germany, many companies are in small towns, German companies think that manufacturing is not suitable for layout in big cities, quiet small towns are more suitable, but at the same time, all aspects of the facilities should also be convenient, and Taicang just meet this condition.

Taicang is the closest city along the Yangtze River to Shanghai. It is only 50 kilometers from the main city of Taicang to the center of Shanghai. It only takes about 26 minutes to take the Shanghai-Sutong Railway to Shanghai Hongqiao Hub. At the same time, Taicang Port is the largest port on the Yangtze River. In 2022, the container throughput of Taicang Port exceeded 8 million TEU and the cargo throughput exceeded 260 million tons, among which the container throughput ranked first in Jiangsu for five consecutive years.

“When German companies settled in Taicang, Shanghai only had Hongqiao airport, which was also very convenient to enter and exit, and Taicang has its own port, which is also convenient for goods to enter and exit.” Zhang Zhenwei said.

In addition to geographical location and other advantages, Taicang Municipal people’s government’s attitude toward German enterprises is also considered to be an important factor in the formation of “town of German enterprises”.

According to Duan Yueqiang, at that time, the early negotiations with most German companies were very difficult, often lasting several months, but once mutual trust was established, both sides would fulfill their commitments based on the spirit of contract, “When the first German company settled down, Taicang foreign investment only Chinese contracts, Dr. Stam’s team was still readily signed, and in the subsequent purchase of land to expand production links, there was almost no lawyer involved.” The spirit of contract between the two sides is really rare.”

“The Taicang government has always stressed the shift to a service-oriented government function, to do ‘nothing’ and ‘respond to requests’ for enterprises,” Mr Duan said.

If the first German company settled down is accidental, then the gradual formation of hundreds of German companies gathering is inevitable. “After the Taicang ‘Town of German enterprises’ brand started, a virtuous circle has been formed.” “German companies are very focused on the long-term strategy of making profits in the Chinese market before continuing to invest there,” Mr Duan said.

In addition to the advantages of the small town and the support of the government, in the view of Yang Gang, President of TrumPF China, the smooth communication between German enterprises and the government and German enterprises is also a unique advantage of Taicang.

When Zhang Zhenwei arrived in Taicang in early 1995, there were only three or four German enterprises in Taicang, and the enterprises spontaneously gathered together every month, which was the earliest prototype of the roundtable, but the connection was relatively loose. With the gradual increase of German enterprises in Taicang, German enterprises have common problems and common demands. In order to facilitate communication, the Taicang Association of European Investment Enterprises (TRT) was established in 2006 as a communication platform between German enterprises and German enterprises and the government.

Last year, Suzhou introduced a policy to encourage the reinvestment of profits of foreign-invested enterprises, and a single project that is in line with the direction of Suzhou’s industrial development can receive a maximum of 10 million yuan in financial incentives. “The initial idea for the policy was a meeting of ideas between German companies and the government organized by the European Chamber of Commerce in Taicang, which eventually led to the policy.” Zhang Zhenwei said that the government encourages German enterprises to turn profits into investment, achieving a triple win, for German enterprises Taicang Company, the headquarters of the investment; For German corporate headquarters, tax savings; For local governments, attracting investment has been achieved.