German Corporations in China Report Intense Price Competition Struggles
Prior to Robert Habeck's impending trip to China as Germany's Economic Minister, issues like fierce pricing conflicts, dwindling consumer demand, and geopolitical strife have emerged as top worries among German firms in China, according to a poll conducted by the German Chamber of Commerce (AHK) among 186 companies. Habeck is expected to visit China towards the end of the week.
In this poll, over half of the companies indicated that the current price struggle in China is their primary issue. A little more than half cited weak demand, while a third highlighted geopolitical tensions as their main concern.
Approximately 20% of the surveyed companies are car manufacturers. China is the world's largest car market, and it also boasts the biggest market for electric vehicles. Numerous domestic brands are fighting it out for consumers. The sales have plummeted noticeably in recent months, resulting in cutthroat pricing competitions.
Maximilian Butek, the AHK China's managing director, voiced opposition to potential EU tariffs on electric cars from China during the survey's presentation. According to him, tariffs do not foster competition in the automotive sector. Instead, investments in the EU's competitive edge would be more beneficial. German car manufacturers are "reliant" on the Chinese market.
Last week, the EU Commission announced plans for increased tariffs on electric cars manufactured in China. These moves follow accusations that Chinese manufacturers enjoy extensive subsidies at the expense of European manufacturers.The EU has given Beijing a reprieve on the request of the German government: First, talks with Chinese authorities and firms should transpire, and the new tariffs should be implemented from early July.
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The company's struggle in the price war in China is greatly affected by the weak demand, as revealed by the survey conducted by the German Chamber of Commerce (AHK). Many German corporations, including automobile manufacturers, are facing intense competition due to this price struggle, given China's status as the world's largest car market. The EU's potential tariffs on electric cars from China could further aggravate the situation, as these German manufacturers are heavily reliant on the Chinese market.
