Falling prices and weak demand are the main difficulties facing German companies in China, according to a report by a business body that says European tariffs on Chinese electric vehicles are counterproductive.
China is one of Germany's main trading partners, accounting for a significant portion of their sales in recent years.
But 61% of 186 German companies surveyed by the German Chamber of Commerce said "price pressure" was by far the biggest problem they faced in China.
Weak demand, linked to the slowdown in the world's second-largest economy, and geopolitical tensions also rank among the main problems, the report showed.
Automakers accounted for 21% of the companies surveyed.
China is the world's largest automotive market and the most advanced in terms of electric vehicle (EV) production.
Dozens of Chinese EV brands have been created in recent years, supported by government subsidies.
But China's slowing economy, which is weighing on consumer spending, has led to a price war among manufacturers, which has affected profits.
Foreign manufacturers, which have struggled to adapt to the rapid expansion of China's EV fleet, are now also competing with Chinese vehicles on home soil.
The pressure on prices "is of course the result of overcapacity, but our companies are in complete agreement on this point - that they can only survive these times if they become more competitive," said Maximilian Butek, head of the German Chamber of Commerce, during a presentation.
The European Union and China are at loggerheads over planned new tariffs of up to 38% on imports of Chinese electric cars.
The European Commission, which last year launched an investigation into Chinese subsidies for electric cars, accused Beijing of unfair practices undercutting European carmakers.
Germany has previously raised concerns about implementing higher duties, fearing a crackdown on its automotive giants such as Volkswagen, Mercedes-Benz and BMW, which are heavily invested in China.
"The tariffs now proposed by the EU will not increase the competitiveness of the automotive industry," Butek said.
"That's why (we) would rather advocate investing in the competitiveness of the European Union instead of trying to protect the car industry," he said, adding that German manufacturers are "dependent" on the Chinese market.
German Economy Minister Robert Habeck will visit China this week for talks on economic ties between the two countries, with his spokesman noting that the minister "will not be able to avoid addressing" the issue of EU tariffs. | BGNES
