Decreasing competitiveness in Germany, combined with a weak economy and geopolitical risks, are driving the foreign investments of German industrial companies. Companies also have to consider an increasing number of trade barriers in their location decisions. Consequently, slightly more companies than the previous year intend to invest abroad. Cost savings, rather than expansion, are becoming increasingly prominent. This is the result of a special analysis of the current DIHK Economic Survey from the beginning of 2024. The DIHK examined the investment plans of around 1,900 German industrial companies abroad in more detail.
"Opening up new markets generally provides additional impetus for investments and employment domestically. For many years, foreign investments by German companies have always benefited the location in Germany," said Ilja Nothnagel, Member of the DIHK Executive Board, presenting the special analysis. "However, the tide is turning: More and more companies are now investing abroad because they find the location in Germany too expensive and complicated. They are relocating at the expense of the German location. This is an alarming signal and shows that Germany must become more attractive as a production location again." Of the industrial companies with investment plans abroad, 35 percent cited "cost savings" as the main motive. "Such a high value was last seen in 2008," said Nothnagel. "For smaller companies with fewer than 200 employees, this proportion is almost as high as in 2004 (38 percent), when Germany was the 'sick man of Europe.' Unfortunately, this is a reaction to the deteriorating economic policy conditions in the country," Nothnagel added.
Read more about the survey on the official German website of the DIHK here.
Find the full report in both English and German below:
Special Analysis of the DIHK Economic Survey from the Beginning of 2024
Sonderauswertung der DIHK-Konjunkturumfrage vom Jahresbeginn 2024