Key Findings from the DIHK Report:
- Cost reduction is now the primary reason for investing abroad: While market expansion has traditionally been the leading motive, 35% of companies now cite cost-saving as their top driver, surpassing previous levels.
- North America gains attractiveness: The United States and Canada are becoming increasingly popular investment destinations, driven by lower energy prices and government incentives.
- Declining investment in China: German firms are reducing their presence in China due to geopolitical tensions, supply chain risks, and economic diversification efforts. In contrast, the Asia-Pacific region outside of China remains a mixed picture, with lower investment intentions compared to previous years.
- The Eurozone remains the top region for German investments, though companies continue to express concerns over regulatory complexity and economic stagnation.
Germany’s Declining Domestic Investment Climate
The report also highlights a growing gap between foreign and domestic investment, raising concerns about Germany’s industrial competitiveness. Two out of five manufacturing companies plan to cut back their investments in Germany, citing:
- High energy costs, which continue to burden industrial production.
- Regulatory hurdles and bureaucracy, slowing down project approvals.
- A shortage of skilled labor, making it difficult for companies to expand domestically.
Urgent Call for Policy Reforms
DIHK warns that if these structural challenges are not addressed, Germany risks losing its industrial edge, as companies continue to shift production and R&D investments abroad. The report calls for:
- Lowering energy costs to make production more competitive.
- Reducing bureaucratic hurdles to facilitate business expansion.
- Attracting skilled labor through targeted immigration and education initiatives.
The DIHK survey paints a concerning picture of Germany’s investment climate, urging policymakers to take action before the country faces long-term industrial decline.
Read the full DIHK report here: