International Trade Case Research

CHINAS GATEWAY TO EUROPE

Introduction

China is the fastest growing economy in the world

China has become largest trading nation in the world for

the 1st time in history

Total trade in goods: 4.16 trillion

First quarter in 2014: trade slowed down

President Xi Jinping aims for a bilateral trade agreement

between China and the EU

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Introduction

China imported USD 93.01 billion from the 28 EU

Member States and exported USD 174.22 billion during
the first half of 2013

In Germany the volume of trade with China is ahead of

all other countries of the EU

China views Germany both economically and politically

as its gateway to Europe

To find reasonable arguments for Germanys position

We will compare the 3 strongest European
Economies => Germany, UK, France
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Outline
1

Introduction

General Definitions

Analysis

Discussion

Conclusion

General Definition

Gross Domestic Product:

InvestingAnswers, Inc (2014):

Gross Domestic Product (GDP) is the broadest
quantitative measure of a nation's total economic activity.
More specifically, GDP represents the monetary value of
all goods and services produced within a nation's
geographic borders over a specified period of time.

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General Definition

Import:

The Financial Dictionary defines import as:

A good produced in a country other than the one in which it
is sold. Imports bring money into the producing country and
can remove money from the country in which the good is
sold. For that reason, many economists believe that a
nation's proper balance of trade means more exports are
sold than imports bought. Some countries set up various
trade barriers against imports, notably import quotas and
tariffs. Most governments seek to promote exports, while
they have differing positions on imports.
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General Definition

Export:

The Farlex Financial Dictionary defines Exports as:

A good produced in one country and sold to a customer. In
another country. Exports bring money into the producing
country; for that reason, many economists believe that a
nation's proper balance of trade means more exports are
sold than imports bought. Exports may be difficult to sell in
some countries, as the importers may put up various
protectionist measures such as import quotas and tariffs.
Most governments seek to promote exports, while they
have differing positions on imports.
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Trade relations China - UK

Established in 1950

First western power, gathering trading experience with

China

With 62%, the UK is the biggest oversea market for the

Chinese currency RMB

7th largest importer worldwide ; 12th leading in exports

Large trading deficit

Over past 4 years, Chinas exports to the UK have

doubled
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Trade relations China - UK

Main products imported from China in 2013:

electric equipment:
$ 9.2 billion
machines, engines, pumps:
$ 8.5 billion
clothes:
$ 7.3 billion
furniture, lightning and signs:
$ 3.7 billion

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Trade relations China - UK

Main products exported to China: $ 19.1 billion

Vehicle industry:
$ 7.2 billion
machines, engines, pumps:
$ 2.7 billion
medical / technical equipment:
$ 1.2 billion
electric equipment:
$ 1.0 billion

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Trade relations to France

Established in 1964

France enterprises run businesses 10 years later than

UK and Germany

One reason why they started their business: - major

weapon deal between France and Taiwan

Helping China by developing their nuclear power

programs

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Trade relations to France

China`s exports to France: USD 26.9 billion

China`s imports from France: USD 23.1 billion

Trading deficit of almost USD 6 billion

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Chinese exports to France

Main products imported from China in 2013:

electric equipment:
$ 5.2 billion
machines, engines, pumps:
$ 4.5 billion
clothing
$ 4.5 billion
furniture, lightning and signs:
$ 1.9 billion

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French exports to China

Main products exported to China in 2013:

aircraft and spacecraft sector:
$ 5.1 billion
machines, engines, pumps:
$ 3.9 billion
electronic equipment:
$ 1.9 billion
alcoholic beverages:
$ 1.6 billion

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Trade Relations China-Germany

In 1972, diplomatic relations China and Germany

The Sino-German diplomatic relations

great success story today

German exports to China

In 1972 -> USD 270 million
In 2013 -> USD 87.81 billion

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Trade Relations China-Germany

China is the 5th biggest buyer of German products

After France, the United States, the United Kingdom
and the Netherlands

German exports from China USD 87.81 billion in 2013

The principal German exports to China:

motor vehicles and vehicle parts (29% of exports)
machinery (27%)
data-processing equipment
electrical and optical goods (9%)
electrical equipment (9%)
chemical products (9%)
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Trade Relations China-Germany

China is the 2nd largest provider of German imports,

after the Netherlands.

German imports from China USD 96.12 billion in 2013

The principal German imports from China:

data-processing equipment electrical and optical
goods (36% of imports)
clothing (11%)
electrical equipment (10%)
machinery (8%)
metal goods (4%)

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Trade Relations China-Germany

China is Germanys principal trading partner in Asia

Bilateral trade USD 183.39 billion in 2013

Win-Win-Situation
Chinas transformation offers great opportunities for
German business
Big market

Chinese companies need the high-quality machinery

and equipment from Germany to manufacture their
goods
Textiles, electrical goods and toys which are then
exported to Germany
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Discussion

What are possible reasons for

Germanys position?
Will Germany remain Chinas
gateway to Europe?
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Discussion

Discussing imports and exports between Germany,

United Kingdom France and China

1. Differentiating trade goods between the 28 European

Countries and China

2. Breaking down the trading goods and compare them

to the three selected countries

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Discussion

Step 1: EU28 trade in goods with China (per product, in

million euro)

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Discussion

Step 2: Chinese exports to Germany, the UK and France

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1. Electronic equipment
2. machines, engines and pumps
are the main trading goods

The Top-10 exported goods are

nearly the same in all 3 countries
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Discussion

Germany imports in the 2 sections

1.5 times > United Kingdom
3 times > France

Medical, technical equipment and organic chemicals is

significant higher in Germany
Bayer, Boehringer Ingelheim or Ratiopharm,
obtaining almost 80% of their ingredients to produce
medical products from countries like China, Taiwan
and India

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Discussion

Vehicles is another sector, which occurs in the Top-10 list

of Chinese exports to Germany

Car-Industry, with a revenue of more than USD 500

billion in 2013

By far the biggest industry in Germany

BMW, Mercedes and VW are manufacturing
components of their cars in China and re-import
them again to Germany

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Discussion

Chinese imports from Germany, the UK and France

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Discussion

The total volume of machines, engines and pumps

exported to Germany
9 times higher than UK
6 times higher than France

Vehicles imported from Germany to China

3 times higher than UK

Possibly reasons:
Rolls Royce from the UK cannot address the mass
market

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Discussion

Imports of German electronic equipment

12 times as high as imports from France and the UK

Possibly reasons:
Siemens, a German producer of electronic equipment
has a work-force of 43.000 in China
USD 3.5 billion deal with Shanghai Electric Power
Generation
Developing steam and gas turbines
Huge amount of electronic equipment of German
companies is needed

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Conclusion

China is the fastest growing economy in the world

To keep on rising they need:

technology
and knowledge

Europe plays a key role in this continuing progress

Germany takes on an outstanding role in this

development

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Conclusion

Chinas largest economic sectors are:

Machines, engines and pumps (in general:
technical equipment)
Vehicles

Germany with its longstanding successful, experienced

companies and its top qualified engineers and managers
can satisfy Chinese demands

The label Made in Germany is well known in Europe,

even worldwide

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Conclusion

It turns out to be a Win-Win-Situation for both countries

In the future, companies will gain more knowledge and

need to be seen as competitors as well as partners and
customers

As long as China requests high-quality technology and

knowledge, Germany will remain the gateway to Europe

UK and France cant deliver the same quality level as

Germany

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Conclusion

French chances: The large Space and aircraft economy,

in case Chinas market develops in this segment

UK chance is the growing welfare in China, which

triggers a higher demand for luxury cars (Bentley, Rolls
Royce..)

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End

Thank you for listening!

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