Germany has long enjoyed a lucrative trading relationship with China. The enduring success of the European country’s export-driven economy owes much to the fast-developing Asian powerhouse, which displays a seemingly insatiable appetite for Germany’s industrial and technical products. More than 11 percent of all machinery produced in Germany’s core industrial sector goes to China—now the world’s second-richest country after the United States. China is also a key export market for Germany’s luxury carmakers, such as BMW AG and Volkswagen AG’s Audi division—key clients of U.K.–based Norton Rose and Germany’s Noerr, among others. And despite the recession, the volume of business is still growing. During Chancellor Angela Merkel’s visit to China last September, the two countries signed a new Sino-German economic and cooperation agreement. As part of the deal, Volkswagen recently announced plans to open a parts factory in the northern coastal city of Tianjin.

The investment is not purely one-way, however. Attracted by superior technology and a highly skilled workforce—and, cynics might say, by the opportunity to increase products’ value with a “Made in Germany” stamp—Chinese businesses have also been investing increasingly heavily into the country. According to Germany Trade and Invest, the government’s economic development agency, Chinese companies were the single biggest investors in Germany in 2011, overtaking the United States for the first time. Mergermarket data shows that the total value of announced Chinese investment deals in Germany grew to $1.7 billion in the first nine months of 2012—an annualized increase of more than 200 percent. Germany attracted 12 percent of all outbound M&A transactions from China during that period—second only to Hong Kong. You now hardly find any auction process without some Chinese involvement, says Noerr co–managing partner Dieter Schenk.