BERLIN (Reuters) - The proportion of German firms exiting the Chinese market or considering doing so has more than doubled to 9% in the past four years, according to a survey by the German Chamber of Commerce in China.
The survey highlights the challenges faced by German companies operating in China, including increased competition from local companies, unequal market access, economic headwinds and geopolitical risks, the chamber said.
“Last year was a reality check for German companies operating in China,” said Ulf Reinhardt, chairperson of the chamber for southern China.
Some 2% of the 566 firms surveyed between Sept. 5 and Oct. 6 said they were selling off business operations in China while 7% said they were considering doing so. That compared to a total of 4% exiting China or considering doing so in 2020.
Moreover 44% have taken steps to address risks linked to their business operations in China - including building up China-independent supply chains.
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China seemed like paradise for business. A billion upwardly mobile consumers and cheap ass labor too! The Chinese gov was happy to welcome all the foreign investment but there was a catch: foreign companies were never going to get access to the Chinese consumer. Further, any IP that touched Chinese shores was going to be stolen by the CCP.
All that was manageable but the Chinese economy isn’t what it used to be and now it is finally time to cut bait.
All that was manageable but the Chinese economy isn’t what it used to be and now it is finally time to cut bait.
Agreed, and that “economy” point is two different, but important pieces:
- Cheap labor
- Reliable supply chain
Both of those are history. There’s one other element that was attractive to foreign investment that is also gone and coloring the decisions of these companies.
- China operating mostly geopolitical vanilla (don’t support enemies, don’t intrude on our national domestic affairs, don’t harass/imprison our citizens when they travel to China)
