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12 FOCUS PSI Journal 5/2016 www.psi-network.de the state and is strictly regulated. Banks have earned good money on government loans; private companies still have little access to credit. The financial sector reform is one of the most important milestones on the way to an innovation-driven national economy that is more focused on the domestic market. CHINA IS CONFIDENT In China itself, measures are being taken to prevent fears arising about the end of the growth period and the mood is one of confidence. According to the chief economist of a large Hong Kong asset management company Shen Jianguang, restructuring seems to be working faster than expected. At any rate, with more than 50 per cent (48.1 per cent in the previous year), the services sector has contributed half of the economic performance. The fact that the services sector and domestic consumption have not been able to fully offset the downturn in other sectors had been expected. The pressure on the economy will therefore remain. CHINA ON A SHOPPING SPREE Lately, there have been increasing reports of Chinese either purchasing or intending to purchase companies – worldwide, but especially in Europe and Germany. Chi- nese companies have offered almost 3.2 billion dollars for twelve German companies this year alone. This bidding volume in a single quarter exceeds the volume recorded in each of the previous five years. According to an analysis of the Handelsblatt, no other country has recorded a similarly large sum this year. For the authors, this is a clear sign that China is resolutely pursuing its strategic approach to deve lop new markets and globalize its business. Especially in times when Chinese companies are recording losses and are feeling downsides in global competition because of their economic backwardness, international expansion is intended to cushion the lower organic growth. The salespeople of western companies, however, still fear they are selling out their technologies and allowing their innovations to be siphoned off. At least unofficially the Chinese are considered to be capable of establishing their own cheaper production facilities with Western know-how and then reselling the companies acquired in Europe. CONSEQUENCES FOR THE INDUSTRY What could all these developments mean for the promotional products industry? Many of the problems that confront importers and clients in China are not new and have nothing to do with the current changes. This is clearly reflected in the statements made by our interlocutors. With rising wages, more demanding employees and a revealing lack of skilled labour, a change has been making itself felt for some time. Production costs have been on the rise for a long time, and delays are repeatedly occurring. Western clients, who are still exploiting relatively favourable production conditions, have long known that they can only enforce the desired standards with an intensive quality management and regular inspections. A trusting and ongoing relationship with Chinese partners is a major advantage. Many promotional product companies are making good progress and have built up working partnerships over many years. Considering that the defined objectives should lead to the transformation of China‘s economy, favourable conditions for the industry can be expected from the „new normality“, whereby many of them will come to fruition in the medium term at the earliest. These include for example the announced educational offensives that will bring about a more entrepreneurial, creative society with better trained highly regarded specialists. More than ever before, cooperation with the business partners of the future based on equality would be possible. Unfavourable factors in the Chinese business environment would be, among other things, the intensified safety efforts and the restrictions relating to market access, Internet access and continued inadequate intellectual property protection. < Sources: China­Contact, issues 1­3 2016 www.handelsblatt.com www.spiegel.de www.faznet www.heute.de www.auswaertiges­amt.de/aussenpolitik

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