germany: learning from “the best customer ever”
2024-08-29
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"faced with reduced investment and increasingly frugal consumers, the german economy fell back into contraction in the second quarter after a modest growth in the spring."deutsche presse-agentur reported on the 27th that data released by the german federal statistical office showed that germany's gdp fell in the second quarter of this year. previously released data showed that germany's exports performed poorly. some german media lamented that germany's performance is currently worse than many european countries.some economists even expect a further decline in the third quarter.
employees of continental's gifhorn plant, a german auto parts giant, are showing hydraulic valve blocks. due to cost pressure, the plant will transfer production capacity to countries surrounding germany. (visual china)
pressure from exports and consumption
ruth brand, president of the german federal statistical office, said: "after a small increase in the previous quarter, the german economy cooled down again in the spring." in the first quarter, germany's gdp grew by 0.2% month-on-month, but foreign trade lacked stimulation in the second quarter: exports of goods and services decreased by 0.2% compared with the first quarter. this dragged down german industrial data. the latest report from the german federal statistical office shows thatgermany's exports fell 1.6% to 801.7 billion euros in the first half of 2024 compared with the same period last year. germany's imports totaled 662.8 billion euros, down 6.2% from the first half of 2023.but cars remain germany's flagship product.
some statisticians say thatone of the reasons for the german economy's contraction in the second quarter was a lack of investment in equipment, especially in machinery and vehicles. at the same time, consumers also lacked confidence in spending.according to the latest consumer climate study by german market research institute gfk and the nuremberg institute for market research (nim), consumer confidence also cooled in august. nim consumer expert rolf burkel said: "obviously, the consumer enthusiasm aroused by the european cup in germany disappeared after the game."
"the current data shows that the german economy is stagnating," said german finance minister lindner. the german federal government's "traffic light" ruling coalition has formulated 49 measures to stimulate the economy, but almost none of them have been implemented so far.
“we live in an old industry”
"germany is sinking further into economic difficulties," the german newspaper frankfurter allgemeine zeitung said on the 27th. the german economy is in recession, and reports continue to emphasize the widespread crisis sentiment. the business climate index released by the munich ifo institute for economic research on the same day fell for the third consecutive month in august. "the german economy is increasingly in crisis," said clemens foster, director of the ifo institute for economic research.
the report said that there are many reasons why the german economy is in trouble, which also means that it is difficult to repair.in the long term, germany faces several challenges at once: demographic changes and the resulting shortage of skilled workers; high energy prices that undermine the country's competitiveness; and delayed investments in digitalization, green transformation and infrastructure that now have to be made up.
another underlying reason highlighted by economist daniel stelter in an interview with the german focus magazine is:germany has made no effort to diversify its industries in recent decades, nor has it paid attention to the development of new industries.the german economy is still dominated by industries from the old days: car manufacturing, mechanical engineering, the chemical industry. "we live in old industries, where we were the global leader more than 100 years ago and have maintained this position to this day, which is of course a good thing - but it also shows that germany has not kept up with the new wave of development."
learn from your best customers
some german media and experts attributed the german economic recession to the competition between german and chinese companies. the german newspaper munich mercury reported on the 27th that the united states has replaced china as germany's most important trading partner, and the best customers of german companies are becoming competitors.according to calculations by the handelsblatt institute, the export share of german industrial machinery and equipment will drop from 16% to 15.2% between 2013 and 2023. in contrast, the share of chinese companies is rising.some analysts believe that chinese companies are increasingly penetrating into high-value areas where german companies have previously performed well.
however, there are also many voices that believe that german companies should learn some characteristics of chinese companies. germany's focus magazine said that germany likes to boast that it is the world champion in the field of circular economy, but china's renewable energy has formed a complete supply chain, whether it is materials, production or research and development, it is in the world's leading position. "deutsche welle" reported that the ranking released by the united nations on the 28th showed that china has the largest number of technology clusters in the world for two consecutive years. german business leaders said,china's emphasis on green technology, electric vehicles and digital innovation provides fertile ground for further cooperation and development, and may attract more investment from german companies.
zheng chunrong, director of the german research center at tongji university, told the global times that although the eu and germany are promoting "de-risking" in their foreign economic and trade policies to get rid of their dependence on china, in fact, china-germany and even china-eu economic and trade are closely integrated.many companies eventually chose to increase their investment in china amid political clamor for risk diversification and reducing investment in china.
in the fields of energy and automobiles, the results of sino-german cooperation are particularly significant. in july, luxcara, a german renewable energy developer, signed a contract with china's ming yang group to install 16 chinese wind turbines in germany for the first time. other german wind farm operators are also negotiating with chinese suppliers. at the chengdu auto show, which will open at the end of august, many german automakers will showcase the results of sino-german cooperation in the field of new energy.
arved kessel, an economist in berlin, germany, told a special correspondent of the global times that this year's high-level visits by german government officials to china sent a signal that the german government is seeking to expand cooperation with china in areas such as climate, environmental protection, and transportation.china and germany are both leading global manufacturing powers. cooperation between the two countries can enable industrial chains and supply chains to be deeply embedded and enhance international competitiveness.
source: global times
