Flash Surveys

Key Findings:

• Tariffs have the largest impact among all trade instruments: German companies are most affected by tariffs, with 76% citing U.S. tariffs and 63% mentioning Chinese tariffs. U.S. export controls rank third (43%), followed by U.S. anti-sanctions legislation with 39%.
• More impact from U.S. trade measures: 75% of companies are affected by the latest trade measures from the U.S. toward China, while 57% report seeing an impact from Chinese measures against the U.S.
• Accelerated localization as a response to trade conflict: 38% of German companies are accelerating their localization plans in China as one of their main responses to the trade conflict. Almost half (48%) are taking a wait-and-see approach and want to continue observing the situation.
• Outlook for China's economy is fading amid trade conflict: Over half (56%) of German companies predict a decline in economic conditions over the next six months, a substantial increase of 40 percentage points when asked the same question last year in May 2024. Meanwhile, only 15% expect an improvement, and 30% foresee no significant changes.
• Industry development continues to lag: Although showing improvement compared to last year, 44% still expect a decline in industry development for 2025. Meanwhile, 19% foresee improving conditions (September last year 15%), while 37% expect the situation to remain unchanged.
• Turnover and profit expectations muted: Only 29% expect an increase in turnover by the end of 2025, 4 percentage points less than in September last year. Moreover, expectations for profit increase have declined from 22% to 18%.
• Nonetheless, investment intentions remain solid: 50% of respondents intend to increase their investment in the next two years, showing a stable trend compared with 51% in September last year. Meanwhile, 18% of companies plan to decrease their investment, up 4 percentage points.
• Companies call for a more hands-on approach toward China: Two-thirds (66%) of companies want the new German government to promote an active and informed engagement with China as a way to support their business. Additionally, 52% believe improving China’s image in Germany would strengthen operations, while 40% see early government visits as key support.

Key findings:

• Automotive companies face greater impact: 93% of surveyed companies from the automotive sector are affected by the latest tariffs. Across all industries, the figure is 86%.
• US export controls create obstacles: 43% of companies are impacted by American export controls, rising to 50% in the automotive industry.
• Accelerated localization as a response: 38% of German companies are accelerating their localization plans in China as one of their main responses to the trade conflict. In the automotive sector, this figure climbs to 48%.

Key Findings:

• Optimism in the Chinese economy is slowly returning: 38% expect an improvement in the coming six months, while 16% expect the economy to weaken. 46% of respondents are not anticipating significant changes to China’s economic development in the coming six months compared to the previous six months.
• Business outlook is recovering at a low level: Just 38% of respondents anticipate a worsening situation for their industry compared to 2023, a significant decrease from 52% when asked the same question last year in September. Meanwhile, 29% expect their industry to improve compared to the previous year – a slight increase of 8 percentage points.
• Surging turnover, while profits remain stagnant: 39% of companies project their turnover to increase in 2024 compared to last year. When asked the same question last year, only 13 % were expecting increasing turnover. However, only 25% expect profits to increase by the end of 2024.
• Slim majority plans to keep investing: Only 53% of respondents are planning to increase their investment in China in the coming two years, down from 61% when asked the same question last year. 27% are not planning to invest further while 16% are planning to decrease investment.
• Price pressure dominates other challenges: Price pressure is cited by 61% of respondents as the biggest challenge they are facing at the moment. Weak demand in the Chinese market was also identified as a significant concern for 51% of respondents, while geopolitical tensions came in third with 37%.
• Majority observes overcapacities: 75% of German companies see overcapacities in their industry (little: 19%, medium: 36%, substantial: 20%). Nearly all (96%) of these companies state that overcapacities are affecting their business (slightly affected: 44%, strongly affected 49%, very strongly affected 3%). 49% indicate that they started observing overcapacities since last year (this year: 7%, 5 years ago: 35%, 10 years ago: 4%).
• Fair competitive environment must be a priority: 47% of respondents say that equal treatment of foreign and domestic companies should be addressed by the German government, followed by advocating for a more transparent regulatory environment (29%) and deepening cooperation formats in the area of green transformation (24%).

Key findings:

• Two-thirds of the surveyed companies say they are affected by unfair competition.
• German companies consider themselves superior to their Chinese competitors in terms of product quality, technological leadership, and innovation strength.
• They rate their cost efficiency, time to market readiness, and innovation speed as weakest compared to Chinese competition.
• Competitive disadvantages are particularly seen in market access and access to networks (e.g., government, local authorities, access to public tenders, etc.).
• The heightened competition is expected to cause increased cost pressures, reduced profit margins, and lower market shares.

Key findings:

• Several challenges lead to relatively slow progress of compliance:  Only 8% of companies which applied passed the review. 38 % of the survey respondent don't think that the law applies to them and more than 20% plan to fulfill their reporting obligations after the release of the “Draft Regulation" by the Cyberspace Administration of China.
• Multiple application creates heavy workload for German companies: Given that there is no restriction for each company choosing only one method of application, 42% try to make multiple compliance applications using several items.
• Low transparency is the main challenge during the application process: Half of the companies surveyed who applied see unclear regulatory requirements and the inability to keep up to date with the application progress as major concerns.
• Multiple internal and external factors complicate data processing: Vague definitions of important data (54%), unclear amount of data (50%) and heavy workload (50%) are the biggest challenges during the data processing for German companies.
• Many companies are still in a wait-and-see-mode: Two thirds of the companies that plan but have not yet started to apply think that they do not fall under the scope of the regulation and 56% wait for the release of the important data catalogue. 
• Companies suffer from heavy costs: 85 % of surveyed companies have already made some investment. The biggest impact of compliance with cross-border data transfer are additional compliance costs (70%) and increased communication costs & risks for communication with headquarters (57%).