German companies more pessimistic in China than in Asia-Pacific

The analysis captures the responses of more than 500 companies surveyed in the region. According to the analysis, the Asia-Pacific region, which stretches from Central Asia to Oceania, seems to be developing better than China and the rest of the world: Here, on average, about one in four companies expects the countries' economies to develop more strongly. For China, only 14 percent of the companies operating there expect an economic upturn.

"Above all, the zero-covid policy with its hard lockdowns, but also the increasingly protectionist economic policy, continue to severely affect German companies in China," says Peter Adrian, President of the Association of German Chambers of Industry and Commerce (DIHK), on the occasion of the Asia-Pacific Conference (APK) in Singapore, which he is attending together with German Chancellor Olaf Scholz and Economics Minister Robert Habeck.

This has led to significant disruptions in Chinese production, he said, which is why two-thirds of companies see business risks in the lack of demand and more than half of companies (59 percent) in the global impact of supply chain disruptions.

Expectations also subdued in Asia

The less hopeful economic outlook worldwide is also clouding the concrete business expectations of German companies in Asia – albeit not to such a dramatic extent as for their domestic counterparts in Germany. According to the survey, almost half of the companies (44 percent) in Asia-Pacific expect their own business to develop positively in the coming twelve months, while 17 percent anticipate a deterioration. In China, on the other hand, only 28 percent of the companies are optimistic about the next year, 23 percent expect business to deteriorate.

The fact that companies in the Asian countries (excluding China) are more optimistic in a global comparison is also reflected in the expansionary investment plans there: 35 percent of the companies are planning a higher investment budget for the coming twelve months, which is even more than in the previous survey in the spring of this year (33 percent).

Region remains attractive

"Those looking for alternative locations outside China for a necessary diversification already find good conditions beyond the borders," says Adrian. "So the region remains attractive for German companies, an important signal also for the upcoming conference."

Dominant risks in the region are the continued fluctuating exchange rates (50 percent), supply chain disruptions (50 percent), insufficient demand (43 percent) and high commodity prices (43 percent). 

Many plus points from supplier network to energy costs

Despite the challenges, the companies see numerous advantages in their host countries in Asia: In the region, the supplier network stands out as a central location advantage. Particularly in China (66 percent, the highest value worldwide), companies appreciate the good supplier structure (Asia-Pacific, excluding Greater China: 40 percent).

Another advantage is the availability of skilled labour in the region – 43 percent of companies in China and 38 percent in Asia-Pacific see this as an advantage. Labour costs are also attractive, but more companies in Asia-Pacific see them as an advantage (40 percent) than in China (31 percent). In contrast, companies in China – compared to Europe – particularly appreciate the lower level of energy costs: 42 percent see this as a locational advantage.

Building partnerships and cooperation

Peter Adrian: "The rapid rise in energy costs is and will remain the stumbling block for the German economy in the foreseeable future. Locations that can score with lower energy costs now have decisive competitive advantages. The task now is to build and maintain partnerships and cooperations so that we can benefit from this advantage on a broad scale."

The complete survey results can be downloaded here in PDF format:

Special evaluation of the AHK World Business Outlook Fall 2022 (PDF, 989 KB)