German Chamber Flash-Survey: Current COVID-19 Outbreak and Ukraine War Heavily Impacting German Businesses in China

Beijing/Guangzhou/Shanghai, March 31, 2022 - With major Chinese cities in lockdown and an ongoing devastating war in Europe, German companies in China are increasingly anxious about their businesses, a flash survey conducted by the German Chamber of Commerce in China shows.

Due to the war in Ukraine, for over half of the responding companies, the current geopolitical crisis impacts their headquarters’ China strategy. One third of respondents are putting planned business or investments on hold. 46% of the responding companies currently see a decrease in the attractiveness of the Chinese market compared to other markets. The war in Ukraine massively affects logistics from or to Europe and raises costs for energy and raw materials.

In addition, the current COVID-19-outbreak in China strongly disrupts German companies’ business operations, such as logistics, production, and the entire supply chain within China. Current COVID-19-prevention measures lead to around 50% of companies reporting a complete disruption or a severe impact on logistics, warehousing, and supply chain.

“What companies need now are signs of stability. We encourage the Chinese and European leaders to send positive signals at the upcoming EU-China Summit in contributing to world peace.”, states the All-China Board of the German Chamber of Commerce in China. “Being in the middle of the current COVID-19 wave in China, the German business community strongly needs an indication of the direction of the Government’s COVID-strategy, to minimize the severe impact on business operations and supply chains. Currently, timely and transparent communication on the next steps and measures are urgently required.”

Key Findings of the Flash Survey

Impact of the war in Ukraine:

• 46% of the surveyed German companies in China’s logistics to, from, and through Europe are completely or severely impacted by the current geopolitical crisis 
• 55% of German’s companies business operations are completely or severely impacted by rising energy and material costs
• 57% of the respondents report that the current geopolitical crisis impacts their headquarters’ China strategy
• Due to the current geopolitical crisis, 32% of German companies expect planned business or investment in China will be put on hold. 10% report that current business might be moved out of China and 27% expect that the diversification in Asia will be accelerated.
• In contrast, respondents also report that more parts of the supply chain will be shifted to China (23%), localization of business functions (R&D, etc.) will be accelerated (22%), and further business or investment will be allocated to China (14%)
• For 46% of the respondents China’s attractiveness as opposed to other markets decreased due to the current crisis

Impact of COVID-19:

• 51% of German companies’ logistics and warehousing and 46% of German companies’ supply chains are completely disrupted or severely impacted by the current COVID-19 situation in China. Only around 7% report no impact in these business operations. Furthermore, also production and manufacturing (31%), staffing rate (28%), and demand (29%) are completely disrupted or severely impacted for a significant portion of German companies.
• Especially supply chains are severely impacted following the recent lockdowns in China amid the current COVID-19 outbreak: For the upstream supply chain operations, 40% report a complete disruption or severe impact due to raw materials or upstream products not being available. Further, 30% report a complete disruption or severe impact in the transport of raw materials and upstream products to the company. For the downstream supply chain operations, the delivery of finished products to local customers (35%), and export of goods to Europe (33%) is severely impacted or completely disrupted.
• German companies require more support from the local governments with timely communication of measures and policies (66%) green channels for staff (e.g. to be able to commute to work) (59%), green channels for logistics (56%), and facilitation of quarantine procedures for staff (36%)

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About the Survey

Between March 18 and 27, 2022, a total of 391 member companies of the German Chamber of Commerce in China participated in the flash survey on the impacts of the war in Ukraine and the recent COVID-19 outbreak on German business in China.

About the German Chamber of Commerce in China

The German Chamber of Commerce in China has currently more than 2,100 members in mainland China and is the official member organization for German companies in China. By providing up to date market information and practical advice, the German Chamber helps its members to succeed in China. It offers a platform for the Sino-German business community and represents its members' interests towards stakeholders including government bodies and the public.

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