2018 Foreign investment continues to rise - Germany benefits - Foreign investment of the manufacturing industry - DIHK
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Foreign investment continues to rise –
Germany benefits
Foreign investment of the manufacturing industry
2018
2 DIHK-Survey – Foreign investments in manufacturing industry 2018
With the “Foreign investments continue to rise - Germany benefits" survey on foreign investments in
manufacturing industry in the spring of 2018, the association of German Chambers of Commerce and
Industry (DIHK) is presenting an analysis based on the results of a supplementary survey as part of the
DIHK business survey at the beginning of 2018. This special evaluation continues the DIHK survey on
foreign investments, which goes back to the year 1995. The basis of the results is provided in each case
by representative surveys of the Chambers of Commerce and Industry (IHKs) among their member com-
panies. Around 2,500 replies from companies from the manufacturing sector (excluding construction)
serve as a basis.
Copyright © Association of German Chambers of Industry and Commerce e. V. (DIHK)
DIHK Berlin:
Postal address: D-11052 Berlin | Visitors address: Breite Straße 29 | D-10178 Berlin-Mitte
Tel. ++49-30-20308-0 | Fax ++49-30-20308-1000
DIHK Brussels:
Postal and Visitors address: Avenue des Arts 19 A-D | B-1000 Bruxelles
Tel. ++32-2-286-1611 | Fax ++32-2-286-1605
Web: www.dihk.de
Facebook: www.facebook.com/DIHKBerlin
Twitter: http://twitter.com/DIHK_News
Responsible Dr. Michael Liecke
Sophia Krietenbrink
March 2018
DIHK-Survey – Foreign investments in manufacturing industry 2018 3
Main results
• With the positive development of the economy in most regions of the world, the global invest-
ment activities of German companies also continue growing. More than a third of industrial
companies are planning to increase their foreign investment budgets, with only nine percent
planning a reduction (balance of "higher" and "lower": 27 points), making growth even stronger
than in the previous year (2017: 20 points).
• For the first time, the investment intentions of industrial companies at home and abroad are on
the same level. In recent years, industrial companies abroad have been continually planning sig-
nificantly more expansive investments than here in Germany, mainly due to the high capacity
utilisation and the large backlog demand for equipment.
• Companies with foreign investments see the greatest risks to their business development in the
supply of skilled workers (67 percent) as well as personnel and energy costs (46 and 45 percent
respectively) in Germany.
Target regions for foreign investments
• The eurozone remains the number one investment location for German companies. 63 percent
are planning investments here. Since the previous year the region has become even more at-
tractive due to the continuing economic recovery (then: 60 percent).
• Asia - especially China - is also on the upswing again (China: 39 after 37 percent, Asia/Pacific
excluding China: 26 after 25 percent). The stabilisation of the Chinese financial markets and the
dynamic growth throughout Asia are probably the main contributors to this.
• In North America on the other hand, slightly fewer companies than in 2017 are planning to
commit themselves (35 percent after 37 percent previously). It is above all the US government's
trade policy which contains great uncertainties for investment projects in global value-added
chains. After the announcement of the US tax reform, on the other hand, additional investment
stimulus was noticeable at the beginning of the year.
Motives/reasons for foreign investments
• By far the most important motive for foreign investments continues to be the development of
local sales structures. The strong global demand for "Made in Germany" goods is even currently
providing a further boost (46 after 45 percent, single rating). In contrast, the expansion of pro-
duction to open up new markets is losing some of its importance (30 after 31 percent). This is
likely to be due not least to the repeated increase in importance of the domestic market, which
is more frequently served by exports from domestic production facilities. Furthermore, around
one in four companies (24 percent) continues to invest abroad for cost reasons.
• The supply of skilled workers is increasingly the reason for foreign investments (14 after 10 per-
cent in 2014). The difficulties in recruiting and retaining suitable personnel in Germany are par-
ticularly acute. Companies are therefore increasingly looking to foreign markets.
4 DIHK-Survey – Foreign investments in manufacturing industry 2018
Budgets for foreign investments continue to rise
With the positive development of the economy in most regions of the world, the global investment ac-
tivities of German companies also continue to increase. Industrial companies want to increase their ex-
penditure on foreign investments even more than in the recent past. However, the momentum is not
quite as strong as for domestic investments. For this reason, the investment intentions in Germany and
abroad are on the same level for the first time. The proportion of companies wishing to invest abroad
has slightly decreased.
Share of industrial companies with plans for foreign investment
in per cent
49
47 47 47
46
45
44 44
43
40
34
2001 … 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Domestic and Foreign Investment Intentions
in points
40
30
20
10
0
-10
-20
-30
Foreign Investments Domestic Investments
-40
2012
1995
1996
1997
1998
1999
2000
2001
2003
2004
2005
2006
2007
2008
2009
2010
2011
2013
2014
2015
2016
2017
2018
DIHK-Survey – Foreign investments in manufacturing industry 2018 5
Eurozone becomes even more attractive
The eurozone remains the most popular target region for foreign investments by German industrial com-
panies. As a result of the continued economic recovery, the region is currently becoming even more im-
portant. Furthermore, many companies have established business relationships in the internal market. Asia
- especially China - is also on the upswing again. The stabilisation of the Chinese financial markets and
the dynamic growth throughout Asia are likely to be the main contributors towards this. In North America,
on the other hand, slightly fewer companies are planning a commitment than in 2017. The renegotiation
of the NAFTA Agreement in particular is a source of great uncertainty for investment projects. However,
after the announcement of the US tax reform, additional investment stimulus was noticeable at the be-
ginning of the year.
Foreign Investments of Manufacturing Industry by Region
in per cent; multiple answers possible
63
Eurozone
60
39
China
37
35
North America
37
26
2018
Asia/Pacific without China
25 2017
23
Other EU, Switzerland, Norway
23
18
South-East-Europe, Russia, Turkey
19
15
South and middle America
15
10
Africa, near and middle east
106 DIHK-Survey – Foreign investments in manufacturing industry 2018
Sales and customer service for goods "Made in
Germany" remains the most important invest-
ment motive
By far the most important motive for foreign investments continues to be the establishment of local
sales structures. This has recently even become slightly more important again. The global demand for
products "Made in Germany" is currently high. An efficient sales system is helping to exploit this poten-
tial. On the other hand, the expansion of production to open up new markets is losing some of its im-
portance. The reason for this is probably not least the repeated gain in importance of the eurozone
against the background of the continuing economic recovery. The internal market is better suited to
serving domestic production sites through exports because of the free movement of goods and con-
nected infrastructure. Furthermore, every fourth company continues to invest abroad for cost reasons.
Reasons for Foreign Investments
in per cent; manufacturing industry; 2002 no request for foreign investments
50
45
40
35
30
25
20
15
Saving Costs Market Development Sales and Customer Service
10
2004
2000
2001
2003
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018DIHK-Survey – Foreign investments in manufacturing industry 2018 7
Supply of skilled workers increasingly a reason
for foreign investments
Proximity to customers remains by far the most important reason for commitments abroad. Four out of
five companies are investing for this purpose. However, the significance is no longer quite as great as in
2014 - the date of the last survey on this topic. The reason for this is probably not least the improved
means of digital communication. The only reason for investing that is becoming significantly more im-
portant than in the previous survey is the better availability of skilled workers. The difficulties in recruit-
ing and retaining suitable personnel are severe in Germany. Companies are therefore increasingly look-
ing to foreign markets. However, in view of the comparatively low external value of the euro in recent
years and the relatively stable development, the hedging of exchange rate risks has become significantly
less important.
Reasons for Foreign Investments
in per cent; multiple answers possible
Proximity to Customers 81
87
Better Access to Skilled Labor 14
10
Proximity to Suppliers 14
14
tariff barriers 13
Protection Against Exchange Rate Risks 12
22
Access to Energy and Raw Materials 11
12
less bureaucracy 8
Access to Technology 5
5 2018
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