Energy costs, external competition, and U.S. tariff policies are exacerbating the outflow of industry from Germany. Recent reports from German media reveal that over the past five years, German companies have invested more than €200 billion overseas on average each year. Meanwhile, Germany is also falling behind emerging economies like China in terms of innovation mechanisms. News of German giants like BASF accelerating their layout in the Asia-Pacific market seems to confirm that Germany's status as the &#34;manufacturing center of Europe&#34; is facing a crisis. Experts have told reporters that whether Germany can turn the situation around depends not only on the intensity of its internal reforms but also on complex geopolitical variables.
<h2>&#34;The entire industry sees no future&#34;</h2>
The latest survey results released by management consulting firm Simon-Kucher highlight a worrying trend: 70% of Germany's energy-intensive companies are shifting their investments overseas. A report from the German &#34;Handelsblatt&#34; on the 25th cited experts warning that if this situation continues, it could lead to a significant decline in the added value of German industry.
The report states that about 240 German companies surveyed come from representative industries of &#34;Made in Germany,&#34; such as chemicals, steel, glass, and cement. 31% of the surveyed companies indicated that they are actively relocating or expanding production outside of Europe; 42% of respondents expressed a &#34;greater willingness to invest in European countries outside of Germany,&#34; or will delay investment projects in Germany.
Industry observers have confirmed this bleak outlook. Christoph Günther, managing director of Infraleuna, an operator of chemical industrial parks in Germany, stated that due to insufficient demand, many companies he is familiar with have not fully utilized their capacity for many years, lamenting that &#34;the entire industry sees no future.&#34;
Yvonne Hank, a lawyer at Ritter Gent law firm, which provides consulting services to energy-intensive companies, also confirmed this trend. She has observed that an increasing number of German energy-intensive companies are shifting investments to countries like China, India, or the United States. This trend poses a serious threat to Germany's status as the &#34;industrial center of Europe.&#34;
According to a survey report released by BNP Paribas in the second quarter of this year, the traditional growth drivers of the German economy are facing challenges. In the short term, the tariff increases by the Trump administration in the U.S. will put pressure on exports and exacerbate economic uncertainty.
The report shows that from the end of 2021 to the end of 2024, Germany's GDP is stagnating, primarily due to a decline in manufacturing exports. From 2022 to 2024, Germany's export volume is expected to decrease by 4.2%, reflecting the rising costs and the emergence of Asian competitors in multiple industries leading to a decline in the competitiveness of German industrial products. This situation is also reflected in the financial reports of German companies. According to the performance report released on August 6, German chemical giant Bayer reported a net loss in the second quarter of this year that increased sixfold year-on-year, reaching €199 million.
Dong Yifan, an associate researcher at the Institute of Country and Regional Studies at Beijing Language and Culture University, told Global Times reporters that in the short term, this trend will counteract the German government's current economic stimulus plans, including infrastructure investment and industrial subsidies, potentially weakening the effectiveness of these policies; in the long term, as a manufacturing powerhouse, Germany's core economic competitiveness, employment stability, and social problem prevention will face challenges
<h2>German Enterprises Facing &#34;Dual Pressure&#34;</h2>
According to a report by the Business Daily after interviewing representatives from some energy-intensive industries in Germany, the main factors leading to this issue are as follows.
First, high energy costs. The EU's climate policy has led to a continuous rise in carbon emission certificate prices, and the costs that enterprises must pay for each ton of carbon emissions have become a heavy burden. Although some certificates are still issued for free, companies are increasingly uneasy about the future reduction of subsidies and rising cost pressures. Christian Kuhlmann, head of specialty chemicals company Evonik, publicly called for the cancellation of the carbon emission fee in Europe to alleviate the pressure on enterprises.
Second, policy uncertainty has undermined corporate confidence. After the German federal election in early 2025, many companies' expectations for the new government to implement &#34;autumn reforms&#34; have gradually faded. A survey by the German Federal Association of Small and Medium-sized Enterprises shows that about 80% of the surveyed companies are pessimistic about whether the new government can improve the business environment.
Some of the aid measures announced by the German government so far are also &#34;a drop in the bucket&#34; for enterprises. For example, the German government plans to subsidize a total of 6.5 billion euros in grid costs for enterprises by 2026. Gunther, an operator of a chemical industrial park, admitted that this has a negligible impact on energy-intensive industries. In the chemical park where his company is located, the subsidy amount is 4.48 million euros, which is only about 2% to 3% of the electricity costs of the chemical park.
Third, U.S. President Trump's tariff war is putting pressure on Germany's energy-intensive industries in multiple ways. European steel manufacturer ArcelorMittal told the Business Daily that it is facing &#34;unfair imported products continuously flooding in from outside the EU.&#34; German specialty glass manufacturer Schott has proactively adjusted its investment strategy. The company confirmed that its investment decisions over the past two years have &#34;favored capacity being established in countries outside Germany.&#34; In the future, Schott will continue to implement a model that is more localized to the market. Simon Gu and partner Jan Hammer stated, &#34;Many energy-intensive companies are now making site selection decisions.&#34;
Fourth, economic weakness has led to a collapse in demand. Currently, the German economy has failed to recover: the German central bank predicts that the economy will stagnate in the third quarter of 2025, which has led many companies to continuously lower their demand expectations and control production scale. Some German chemical companies have a plant capacity utilization rate of only 71%. According to industry association data, German chemical companies can only be profitable when the capacity utilization rate reaches around 82%.
Dong Yifan stated that the trend of German energy-intensive enterprises shifting investments abroad is both an inevitable result under the backdrop of international industrial transfer, as seen in the characteristics of Japan, Europe, and the United States during the wave of globalization in the last century; it also reflects that the globalization layout of German companies is being squeezed by both domestic political and economic conditions and geopolitical factors. The aging of domestic infrastructure in Germany, coupled with rising energy costs after the Russia-Ukraine conflict and the impact of aggressive energy transition, has led these enterprises to view relocation as a realistic choice after cost-benefit calculations.
<h2>Over 200 Billion Euros Flowing Out Annually</h2>
In response to the survey results, Weidel, co-chair of the Alternative for Germany party, commented that Germany is significantly losing its attractiveness for industrial investment. This means the closure of numerous German factories and the loss of hundreds of thousands of jobs
Cities under impact will face further declines in trade tax revenue. Certain automotive industry clusters in Stuttgart may face the risk of abandonment, similar to the former Detroit in the United States.
According to the &#34;Deutsche Welle&#34; website, today's German manufacturing is struggling under the influence of high energy prices, fierce foreign competition, and new tariffs imposed by the United States on EU products. The German magazine &#34;Focus&#34; believes that German companies are increasingly transferring funds overseas, accumulating to €345.2 billion over the past few decades. In 2024, foreign investment in Germany is expected to total €23.2 billion. Over the past five years, more than €200 billion has left Germany annually on average. If these funds were invested in modernizing domestic factories, building digital infrastructure, and supporting startups, Germany might have already created an &#34;economic miracle.&#34; The report also states that compared to countries like China, Germany's innovation mechanisms have become &#34;very slow&#34;—any plans to build factories in Germany typically take 5 to 7 years from planning to production. Today, China boasts high-speed rail, 5G networks, smart ports, advanced airports, and numerous top research institutions. China invests trillions of dollars annually in infrastructure, resulting in the country not only becoming the &#34;world's factory&#34; but also increasingly the &#34;world's innovation center.&#34; All of this showcases the achievements that a country can attain through significant investment in the future.
The &#34;Business Daily&#34; believes that as a developed industrial nation, Germany now needs to find ways to catch up with the growth pace of other regions, especially Asia. The report cites a spokesperson from the German chemical company BASF, stating, &#34;By 2030, the Asia-Pacific region will account for about 70% of the global chemical market.&#34; BASF is currently building a new integrated production base in Zhanjiang, Guangdong Province, China, and claims it &#34;hopes to invest in production in places where market growth can be sustained in the future.&#34;
According to &#34;Focus,&#34; in such a comparison, not only is German corporate investment significantly flowing out, but also a large number of trained professionals are leaving Germany. Therefore, Germany must quickly restore its attractiveness as an investment destination.
A report from BNP Paribas suggests that the new tariff policies imposed by the United States on the EU may exacerbate the existing pressures on Germany. Data shows that the United States is a core market for Germany, with over 10% of Germany's total exports in 2024 going to the U.S. The president of the German central bank predicts that by 2027, U.S. tariff policies may lead to a 1.5 percentage point decline in Germany's GDP.
Dong Yifan told a reporter from the &#34;Global Times&#34; that the trend of domestic companies in Germany investing abroad will continue to be influenced by multiple factors in the future, with geopolitical and internal policies being core variables.
Author of this article: Qingmu, Li Xundian, Source: Global Times, Original title: &#34;Declining Investment Attractiveness, Heavy Internal and External Pressures, Massive Capital Transfer Overseas Raises Concerns in Germany&#34;
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Germany is facing pressure from industrial outflow and declining investment attractiveness, with companies transferring more than €200 billion in funds overseas each year over the past five years. 70% of energy-intensive companies plan to shift investments abroad, and 31% of companies are actively expanding beyond Europe. Experts warn that without measures, Germany's industrial added value will significantly decline, facing a crisis in its status as the "manufacturing center of Europe."

- Germany is experiencing significant industrial outflow, with over 200 billion euros invested abroad annually due to high energy costs, external competition, and U.S. tariff policies.  
- A recent survey indicates that 70% of energy-intensive companies are shifting investments overseas, with many firms expressing pessimism about the future.  
- Experts warn that if this trend continues, it could lead to a substantial decline in Germany's industrial value-added and threaten its status as a manufacturing hub in Europe.

Investment attractiveness declines, facing heavy internal and external pressures, massive capital shifts overseas raise concerns in Germany