Falling prices and weak demand are the main difficulties facing German companies in China. This is according to a report by a business body. It also said European tariffs on Chinese electric vehicles are counterproductive. China is one of Germany’s top trading partners, accounting for a significant portion of their sales in recent years.
But 61% of 186 German companies surveyed by the German Chamber of Commerce said “pressure on prices” is by far the biggest problem they face in China. Weak demand linked to the slowdown in the world’s second-largest economy and geopolitical tensions also ranked among the top concerns.
China is the world’s largest car market and the most advanced in terms of electric vehicle (EV) production. Dozens of Chinese EV brands have been established in recent years, supported by state subsidies. But China’s economic slowdown, which is weighing on consumer spending, has led to a price war between manufacturers, impacting profits.
Source: https://en.wikipedia.org
Foreign manufacturers, who 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.
The EU and China are locked in a row over planned new tariffs of up to 38% on imports of Chinese EVs. The European Commission, which launched a probe in 2023 into Chinese EV subsidies, has accused Beijing of unfair practices undercutting Europe’s car manufacturers.
Tariffs as suggested now by the EU but that will not increase competitiveness of the automotive industry. Investing into competitiveness is a better solution. Europeans and Americans have to learn to compete. If China, a communist state and can compete, why can’t you?
Reference:
German companies concerned by falling prices in China, FMT, 17 June 2024
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