Berlin (Reuters) – Many German industrial companies rate China as more attractive than their home location.
Every second company in the manufacturing industry considers the Asian country attractive – only 38 percent say that about Germany, according to a Kantar survey for the management consultancy FTI-Andersch on Monday. According to this, only 40 percent of the companies where concrete planning has already begun want to invest in their production network in Germany. Among those where expansion is not imminent, only a third can imagine further investments in their home country.
The largest group of those who are now planning to expand outside Germany want to do so in Asia – 40 percent in total, 15 percent directly in China. This is followed by Eastern, Central and Western Europe with 35 percent each and North, Central and South America with 32 percent – two thirds of which are directly in the USA. “Germany has lost much of its attractiveness as a location for many companies,” said Mike Zöller, CEO of FTI-Andersch. Reasons are, for example, high energy prices and the availability of energy, the regulatory environment and a shortage of skilled workers. There are also shifts around the world. China is still an attractive location for the majority of German companies. This is not only true because of the sheer size of the country with the most population in the world, India. According to their own statements, companies in China also benefit from more flexible working time laws and often find suitable staff more easily than in Germany.
China is an extremely important sales market for the export-oriented German economy and at the same time the largest trading partner for imports. In the federal government’s new China strategy, however, companies are being asked to reduce their risks and dependencies in China business (“de-risking”). The government describes China as a partner, competitor, but also as a systemic rival. The government in Beijing is ready to exert economic pressure to achieve political goals.
Nevertheless, according to the survey, around 84 percent of the companies already active in China want to stay there. Around 73 percent rule out relocating parts of their production network out of China – a good one in five wants to diversify more in Asia in the future and is currently working on a more decentralized production network. A total of 58 percent of the companies are working on expanding their supplier network in other Asian countries as well, 50 percent want to improve their European supply chains.
Outside Asia, the USA in particular is currently considered to be extremely attractive. Around 21 percent of companies now want to invest there. Specifically, twelve percent have started to implement these plans, it said. Every fourth company is working on new cooperations or acquisitions with access to the US market. “In the USA, companies find a country with a large sales market, lower energy costs and a liberal market economy,” said Florian Warring, an expert on purchasing and supply chains at FTI-Andersch. The US government’s “Inflation Reduction Act” acts like a large subsidy program for foreign direct investments.
(Report by Klaus Lauer; edited by Ralf Banser – If you have any questions, please contact our editorial team at [email protected] (for politics and the economy) or [email protected] (for companies and markets).)