WBO Fall 2024: German Companies Navigate Challenging Business Climate in Asia-Pacific

19.11.2024

The Asia-Pacific business environment for German companies has reached a historic low, according to the latest AHK World Business Outlook (WBO) for autumn 2024. The region's current economic conditions are rated worse than ever, with only the peak of the COVID-19 pandemic reflecting a more negative outlook. The survey, conducted by the German Chambers of Commerce Abroad (AHK), included responses from 820 member companies.

Mixed Outlook Across Asia-Pacific

Despite the challenging environment, 51% of companies expect improvements in their local business conditions over the next year, while 8% foresee further deterioration.

In Greater China, which includes mainland China, Hong Kong, and Taiwan, investment intentions have dropped significantly, with 28% of companies in mainland China planning to reduce their investment over the next 12 months. However, the region shows a slight recovery in overall sentiment. 

"Despite the gloomy current situation in many locations, our companies in Asia-Pacific are not discouraged and are optimistic about the future," said Volker Treier, Chief of Foreign Trade at DIHK. 

India: A Key Investment Destination

India emerges as a key driver of investment within the Asia-Pacific region. According to the survey, 51% of German companies operating in India plan to increase their investments, placing the country just behind the Philippines, where 52% report similar plans. India also leads in economic optimism, with two-thirds of respondents expecting positive developments in the coming year.

Indonesia: Strengthening Local Competitiveness

Indonesia is still a bright spot in the region. The survey reveals that 53% of German companies in Indonesia have improved their competitive position in the local market over the past five years. This figure matches Vietnam's performance and underscores the strategic shifts companies have made to adapt to local market conditions. 

Broader Risks and Sustainability

Weak demand remains the top challenge for 51% of companies across Asia-Pacific, followed by exchange rate volatility (42%). In Greater China, 76% of respondents identified weak demand as the main business risk. Meanwhile, sustainability requirements are increasingly seen as a competitive advantage. "Sustainability requirements have become a booster for the competitiveness of our companies on the ground," Mr.Treier added. 

However, companies in Greater China face additional hurdles, such as intensified competition and perceived disadvantages for foreign enterprises in local markets.

To view the DIHK article as well as to download the survey results, click here