German machine builders are more reluctant to invest in new markets with a view to Asia. The current mechanical engineering barometer from the auditing and consulting company PwC Germany, which is available to the financial news agency dpa-AFX, provides indications of this. Accordingly, companies that want to expand into new markets tend to concentrate on Europe and North America. Asia is losing traction.
Within a year, the willingness of companies to expand into new markets in Asia had fallen sharply, it said. In the first quarter of the previous year, 72 percent were still planning new investments in Asia; now the figure is only 49 percent. Conversely, Europe is becoming more interesting for new investments: 53 percent of companies want to expand here – an increase of 8 percentage points. In the US it is 57 percent.
Strongest decline in Aisen
It is noticeable that the numbers in Europe and Africa have risen, with a view to the USA the willingness to invest of companies that want to expand into new markets has declined slightly. However, Asia recorded the sharpest decline. According to the study, this could be due to the high risk of default and the geopolitical situation. On the other hand, it is also likely to be related to the ambitious economic stimulus programs in the USA and the EU.
“It may well be that we are seeing the first signs of a disengagement from the Asian market and China in particular,” commented Klaus-Peter Gushurst, head of Industries and Innovations at PwC Germany, according to the announcement. We now know about the fragility of global trade routes. Therefore, companies are well advised to remain independent and flexible.
Restructuring of supply chains is a big topic
Since the corona pandemic and against the background of international tensions, supply chains have repeatedly been disrupted in recent years, with preliminary products or components for industry sometimes being unavailable. According to the study, the restructuring of supply chains is also one of the major issues for companies.
Another focus of the industry is therefore on measures to increase energy efficiency and cyber security. However, this cannot be achieved without bold investments, said Gushurst. But that is exactly where the sticking point lies: When it comes to investments, the industry is rather cautious.
In addition, the investment share of total sales is at its lowest level since 2018 at 5.8 percent. The background is also the cost pressure: many companies expect costs to continue to rise, which, according to the study, also makes price reductions rather unlikely. After all, more than half of those surveyed intend to keep sales prices stable.
Uncertainties remain, but overall many business leaders in the industry are looking to the future with more optimism. Your expectations of sales development have increased. On average, executives expect sales growth of 1.2 percent for 2023. At the end of last year, the entrepreneurs were still assuming a decline in sales.
