China: German companies concerned about downward price trend (report) – 06/17/2024 at 08:40

Falling prices and low demand are the main difficulties in China for German companies, according to a report Monday from the Chamber of Commerce, which considers European customs surcharges on Chinese electric vehicles counterproductive.

China is a crucial market for Germany, the largest economy in the euro zone, like its automobile manufacturers who generate a significant part of their turnover there.

For 61% of German companies surveyed, “price pressure” is by far the biggest difficulty at the moment in China, the German Chamber of Commerce indicates in a report.

Weak demand (51%), linked to the slowdown of the world’s second largest economy, and geopolitical tensions (37%) follow at the top of the concerns, according to the Chamber, which surveyed 186 companies.

Car manufacturers represent 21% of respondents.

China is the world’s largest automobile market and the most advanced in electric vehicles.

Dozens of innovative local brands have emerged there in recent years, supported in particular by purchasing subsidies.

But the economic slowdown, which is weighing on consumer spending, has led in recent months to a price war between manufacturers to the detriment of their profitability.

The “pressure on prices” is “of course the result of overcapacity, but our companies are aware that they can only survive this period if they become more competitive,” said Maximilian Butek on Friday during a presentation. , an official of the German Chamber.

Foreign manufacturers, who are struggling to adapt to the rapid electrification of the automobile fleet in China, are now threatened on their territory by Chinese vehicles.

The European Commission, which accuses Beijing of having illegally favored its manufacturers, plans to impose from July 4 up to 38% additional customs duties on imports of Chinese electric vehicles into the EU.

Germany is reserved regarding these measures, fearing reprisals for its automobile giants with a strong presence in China, such as Volkswagen, Mercedes-Benz and BMW.

“The customs duties proposed by the EU will not increase competitiveness,” believes Maximilian Butek.

“We therefore prefer to invest in competitiveness (…) rather than trying to protect the automobile industry,” argues the official, noting that German manufacturers are “dependent” on the Chinese market.

In the midst of trade tensions, German Economy Minister Robert Habeck is expected in China at the end of the week.