Germany and Hong Kong are facing similar issues on many fronts and sustained exchanges of experiences and ideas will contribute to mutual benefits, according to German Consul-General Heinrich Wilhelm Beuth. Dr Beuth said co-operation went beyond economics and politics, and both sides were keen to strengthen their bilateral relationships on many levels, including in the fields of academia and culture. 'In a way, our societies have similar problems,' he said. For instance, Germany has an ageing population, as does Hong Kong. Faced with a shrinking proportion of youngsters, Dr Beuth said Hong Kong and Germany needed to explore how to arrange education in a competitive global environment to attract students and researchers from abroad. 'There are a number of aspects where we can share and exchange our experiences, even in the area of town planning,' he said. The German consulate in Hong Kong has been aiding communication and interaction through regular visits and meetings with government officials on both sides. Delegations from Hong Kong are invited to visit Germany to investigate all sectors while German delegations, including members of parliament, come to Hong Kong to inspect the city's infrastructure, transport, public housing system and environment. Dr Beuth said academic exchanges and co-operation were also promoted to establish closer ties between the people of the two societies. He said the consulate would continue to enhance mutual co-operation by arranging visits of senior government officials between the two sides in coming years. Germany and Hong Kong enjoy good bilateral trade relations. After Britain, Germany is Hong Kong's most important trading partner in the European Union - accounting for 4 per cent of Hong Kong imports and 2 per cent of exports. Germany mainly exports cars, special machinery and electrical appliances to Hong Kong, while more than 60 per cent of the imports from Hong Kong are textiles and accessories, and computer parts and office machines. Hong Kong's exports to Germany increased 8 per cent to US$1.1 billion in the first two months of this year, after growing 15 per cent to US$7.2 billion last year. The city's imports from Germany rose 17 per cent to US$800 million in the first two months of this year, after growing 25 per cent to US$5.3 billion last year. Dr Beuth said Hong Kong's economy was becoming increasingly integrated with the mainland's and the city remained a gateway for overseas companies entering the Chinese market. Increasing numbers of mainland industries were moving towards privatisation, bringing tremendous opportunities to investors, he said. Hong Kong was on the periphery of this huge, developing economy, and the city's business sector was in a strong position to take part in the economic progress and development of the mainland. German companies' physical investment in Hong Kong is limited. Instead, many of them use Hong Kong as a base to penetrate the mainland market. For example, BASF counts China as its biggest investment abroad, but much of this investment goes through Hong Kong. Two years ago, it was widely believed that many companies based in Hong Kong would move to Shanghai because of the China factor. However, Dr Beuth said some of those companies that moved north were returning to Hong Kong. Companies recognised the city's established advantages, such as security of investment, strong financial support and ease in business dealings, particularly on a regional level. Dr Beuth confirmed there were German companies transferring certain portions of their businesses back to Hong Kong. While there had been fears that Hong Kong might lose out to Shanghai in competitiveness over time, Dr Beuth said there was competition but Hong Kong's obvious strengths were being recognised and explored by multinational companies. 'Hong Kong is an economy which is very adaptable. And the business sector will adapt to changes quickly,' he said. Multinational companies would go to China to build production facilities because of the lower costs. 'Production is one thing but not the whole picture. We also need shipping, financing, insurance, quality control, marketing and publicity,' he said. 'It depends very much on which kind of business you are in. When you are producing, you are in China. When you are traders and buyers, you are in Hong Kong.'