The exodus of German companies is developing into a major risk for Germany as a business location, due to a convergence of economic policy obstacles, rising costs, and international competition. Numerous background discussions with business owners and market observers reveal a consistent picture: investments are being postponed or directly relocated abroad. For investors, this development is changing the valuation of entire sectors, as growth is increasingly taking place outside of Germany.
The Relocation of German Companies as a Structural Risk
The relocation of German companies is increasing due to a lack of political reforms and a lack of economic planning certainty. Approval processes continue to take too long, and the digitalization of public administration is progressing only sluggishly. Business owners report that even simple investment projects are being unnecessarily delayed. As a result, Germany’s economic standing is declining in international comparison.
This situation exacerbates an industrial crisis that is not cyclical but structural in nature. Many companies see no short-term turning point, even though they fundamentally want to invest. A persistent modernization backlog weakens confidence, while other countries are strategically expanding their locational advantages.
Germany as a business location is losing competitiveness
Germany as a business location is suffering from high energy prices, complex tax structures, and increasing bureaucracy. While the temporary industrial electricity price provides some relief, companies need long-term planning certainty. Without stable framework conditions, major investment decisions are not being made.
This development leads to a clear competitive disadvantage. Relocating production is becoming a realistic option for German companies because alternative locations grant permits more quickly and actively promote investment. As a result, Germany as a business location is losing not only capital but also industrial value creation.
Export problems further exacerbate the situation
The increasing export problems are further intensifying the exodus of German companies from the industrial sector. Additional tariffs in the US market are reducing margins, while Chinese suppliers are offering state-supported prices. At the same time, a strong euro is making German products more expensive abroad.
This weakness in international sales is affecting key industries and extending into logistics, trade, and services. Declining exports are slowing domestic investment, and employees are reacting with uncertainty. Domestic demand remains weak because consumers are exercising caution.
Investment Flight Changes Strategic Decisions
Under these conditions, investment flight is gaining significant importance. According to recent surveys, a majority of industrial companies are considering further relocations abroad if the general conditions do not improve noticeably. This capital shift no longer affects only large corporations, but increasingly also smaller publicly traded companies.
Locations in Eastern Europe, the USA, and selected emerging markets are particularly attractive. New industrial clusters are emerging there because infrastructure is being expanded and business-friendly reforms are taking effect. Production relocation follows pragmatic business criteria.
Know-how Remains, Value Creation Migrates
Despite the exodus of German companies, technical know-how remains high. German engineering enjoys international trust. Nevertheless, value creation is increasingly shifting abroad because companies need to diversify risks and reduce costs.
Without a consistent realignment, the structural weakness of the industrial sector threatens to become permanent. Reforms, more efficient administrative processes, and reliable location policies could counteract this. So far, however, these signals are lacking, and the industry is already acting independently.