Chongqing - German Chancellor Olaf Scholz arrived in Chongqing on April 14 for a three-day visit to China. He said that Germany and Chongqing cooperate in technology and economy, such as the significant role German companies play in the local automotive sector.

During his visit, Scholz was deeply impressed by Chongqing's industrial urban development. This city is actively developing the "33618" modern manufacturing cluster system, upgrading the industrial structure, and striving to establish a nationally significant advanced manufacturing center.

Numerous German companies have established a presence in Chongqing, engaging with the Chinese market and collaborating with the local manufacturing industry to pursue high-quality development.

Selecting Chongqing for demand and logistics reasons

High-end equipment manufacturing is crucial for industrial modernization, with CNC machine tools serving as the backbone of this sector.

On February 1, the Yongchuan District People's Government finalized an agreement with Liebherr Gear Cutting Technology Co., Ltd., a subsidiary of the Fortune Global 500 company Liebherr Group based in Germany. 

This agreement formally establishes the production base for Liebherr gear-cutting machines and automation systems in the Chongqing Yongchuan Comprehensive Bonded Zone.

The factory building at the Sino-German Industrial Park will expand to 12,000 square meters to accommodate the full range of Liebherr products manufactured in Yongchuan. Completion and operation are expected by September.

This project, directly invested by Liebherr Machine Tools Headquarters from Germany, aims to establish the complete industrial chain of production, sales, and service for Liebherr Machine Tools in China. Leveraging the advantages of the Yongchuan Comprehensive Bonded Zone, future business operations, including bonded R&D, processing, testing, and maintenance, will also be conducted.

Liebherr Company attributes the establishment in Yongchuan to two main factors: the growing demand for machine tools in China and the strategic opportunities presented by the Belt and Road Initiative and the New International Land-Sea Trade Corridor. They aim to expand into the Western China market and comprehensively enhance their business operations.

Upon the base completion, it will efficiently absorb advantageous European production capacity. Besides serving the Chinese market, products will also target Southeast Asia and the Japanese and Korean markets in the future.

In talks with Yongchuan to expand investment plans

Five years ago, the German company Schwäbische Werkzeugmaschinen (SW), which specializes in machine tools, established its first core component factory for machine tools in Yongchuan to enter the Western China market. 

In 2023, the company's sales of core components alone surpassed 110 million yuan, solidifying a strategy of complete machine factories in the east and core components in the west.

As the Chinese market opens up and Chongqing's production cost advantages become more apparent, the company is in talks with Yongchuan District to expand its investment plans. Their plan involves establishing a bonded processing base for main spindles, tool magazines, and bed components within the Yongchuan Comprehensive Bonded Zone.

Building upon their new base in Chongqing, their goal is to export to Germany and the United States, adhering to the standards of "better cost, higher efficiency, and superior quality." 

According to the Technical Director of SW Chongqing Co., Ltd., in 2023, the production value of the Yongchuan base reached 110 million yuan. Their order volume remained stable in the first quarter of this year, exceeding 60 million yuan. China has offered a vast market for German-funded enterprises.

Currently, the sales volume of CNC machine tools in the Sino-German Industrial Park accounts for about one-third of the total sales volume in the city, establishing Yongchuan's favorable reputation as a destination for purchasing CNC machine tools.

Statistics show that German-funded enterprises Liebherr and SW machine tools experienced significant growth in production and sales during the first quarter after establishing themselves in the Sino-German Industrial Park. Compared to the same period last year, the output value rose by an average of 15%.

The Yongchuan Comprehensive Bonded Zone is advantageous in facilitating international trade and investment. This zone offers various incentives and policies to promote economic growth, including streamlined customs procedures, tax benefits, and infrastructure support.

(Deng Yawen, as an intern, also contributed to this report.)