Falling prices and weak demand are the main difficulties facing German companies in China, the German Chamber of Commerce said in a report yesterday, adding that European tariffs on Chinese electric vehicles (EVs) are counterproductive.
China is one of Germany’s top trading partners, accounting for a significant portion of its sales in the past few years.
However, 61 percent of 186 German companies surveyed by the business body said that “pressure on prices” is by far the biggest problem they face in China.
Photo: Reuters
Weak demand linked to the slowdown in the world’s second-largest economy and geopolitical tensions also ranked among the top concerns, the report showed.
Automakers made up 21 percent of companies surveyed.
China is the world’s largest auto market and the most advanced in terms of EV production. Dozens of Chinese EV brands have been established in recent years, supported by state subsidies.
However, China’s economic slowdown, which is weighing on consumer spending, has led to a price war between manufacturers, impacting profits. Foreign manufacturers, which have struggled to adapt to the rapid expansion of China’s EV fleet, are now also competing against Chinese vehicles on home turf.
Price pressure “is of course a result of overcapacity, but our companies are quite aligned on that — that they only can survive those times if they become more competitive,” German Chamber of Commerce executive director Maximilian Butek said at a presentation on Friday.
The EU and China are locked in a row over planned new tariffs of up to 38 percent on imports of Chinese EVs. The European Commission, which launched a probe last year into Chinese EV subsidies, has accused Beijing of unfair practices undercutting Europe’s automakers.
Germany has previously expressed concerns about applying higher tariffs, fearing reprisals for its auto giants, such as Volkswagen AG, Mercedes-Benz AG and BMW AG, which are heavily invested in China.
“Tariffs as suggested now by the EU will not increase the competitiveness of the automotive industry,” Butek said.
“Therefore, we [would] rather advocate for investing into the competitiveness of the European Union, rather than trying to protect the auto industry,” he said, adding that German makers are “dependent” on the Chinese market.
German Minister for Economic Affairs and Climate Action Robert Habeck is to visit China this week for talks on economic ties between the two countries, with his spokesperson saying that the minister “will not be able to avoid addressing” the issue of EU tariffs.
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