Many German businesses are packing their bags and leaving China. Photo: AFP

Nearly a quarter of German companies operating in China are planning to relocate all or part of their business out of the country, according to a study released Tuesday, with many blaming rising costs.

The German Chamber of Commerce’s annual survey of 526 member firms in China found that 23% have either already decided to withdraw production capacity in the country or are considering it.

One-third of those companies have planned to leave China entirely.

The rest will transfer part of their business and production overseas, largely to lower-cost countries like India or in Southeast Asia.

Operating costs in China have been rising as the country seeks to rebalance its economy from an export and investment-led model to one driven by consumer spending.

Of the 104 companies that have decided to leave or are considering to, 71% cite the rise in production costs – particularly for labor.

A third blamed an unfavourable public policy environment and one in four said the China-US trade war is having an impact.

“Business expectations have dropped to their lowest level in years,” the study warned, with only a quarter of companies surveyed expecting to meet or exceed their goals this year.

And more than a third said Beijing’s efforts to “level the playing field” for foreign companies are “insufficient.”

“Competition has to be fair,” said German Ambassador Clemens von Goetze at the launch of the study Tuesday.

“Foreign companies, including German companies, and Chinese companies, should play on a level field.”

The ambassador also said German companies had been “not so well informed” about China’s huge Belt and Road Initiative – a US$1 trillion global investment drive – and said they had not been able to benefit from the economic potential of the project.

This initiative “is mainly Chinese-financed and implemented by Chinese companies,” said the German ambassador.

AFP

Asia Times Financial is now live. Linking accurate news, insightful analysis and local knowledge with the ATF China Bond 50 Index, the world's first benchmark cross sector Chinese Bond Indices. Read ATF now. 

Join the Conversation

6 Comments

  1. Greate post. Keep writing such kind of info on your site.

    Im really impressed by your site.
    Hi there, You have done a fantastic job. I’ll definitely digg it and individually suggest to my friends.
    I’m sure they will be benefited from this site.

  2. Hi there! This is my first visit to your blog!
    We are a team of volunteers and starting a new project in a
    community in the same niche. Your blog provided us
    useful information to work on. You have done a marvellous job!

  3. I loved as much as you’ll receive carried out right
    here. The sketch is tasteful, your authored subject
    matter stylish. nonetheless, you command get got an nervousness over that
    you wish be delivering the following. unwell unquestionably come more formerly again as exactly the same nearly
    a lot often inside case you shield this hike.

  4. I love your blog.. very nice colors & theme. Did you design this
    website yourself or did you hire someone to
    do it for you? Plz answer back as I’m looking to create my own blog and would like
    to find out where u got this from. thanks a lot

Leave a comment

Your email address will not be published. Required fields are marked *