German Firms Face Record Low Confidence in China Amid Economic and Competitive Pressures

Despite declining optimism and mounting challenges, most German companies remain committed to operating in China, with many shifting strategies toward localization.

• A survey by the German Chamber of Commerce in China shows business confidence among German firms at its lowest since 2007, with only 32% expecting improvements in 2025.
• Key challenges include weak domestic demand, intense price competition, and growing local protectionism, with initiatives like 'Made in China 2025' favoring domestic companies.
• While 92% of German companies plan to maintain operations in China, only about half intend to increase investments, reflecting cautious optimism about the market's potential.
• German firms are increasingly localizing operations, establishing research and development centers and collaborating with Chinese partners to stay competitive in a rapidly evolving market.
• Geopolitical tensions, including potential U.S.-China trade conflicts under Donald Trump's presidency, are adding to uncertainties for German businesses operating in China.

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