According to a survey, one in three medium-sized companies in Germany want to focus more on trade with Western Europe in the next five years to stabilize supply chains. How come?
Many medium-sized companies want to buy more pre-products again from within Europe to protect themselves against material shortages. In light of shortages and political tensions, safe havens are in demand, according to a survey conducted by DZ Bank among 1,000 owners and managers of medium-sized businesses.
According to this, one in three medium-sized companies in Germany wants to focus more on business with Western Europe in the next five years in order to stabilize supply chains. A full fifth (21%) rely on Central and Eastern Europe around countries such as Poland, the Czech Republic and Slovakia. “There is a clear trend to produce where the products will later be used,” DZ Bank board member Uwe Berghaus said on Monday.
The war in Ukraine has affected many supply chains, made materials such as steel more expensive and caused bottlenecks in wiring harnesses in the automotive industry, for example. The shortage of microchips and bottlenecks in container traffic are also having a negative impact on the German economy. In view of the war in Ukraine, there is a debate about how to deal with China. Economy Minister Robert Habeck (Greens) warned against unilateral dependencies in the Far East and called on companies to position themselves more broadly in Asia.
Divided on relations with China
While the US is becoming increasingly important to SMEs and 15% are aiming for stronger trade ties with the US, the survey shows companies are divided in doing business with China. According to DZ Bank, more than a third of medium-sized companies depend on the People’s Republic for their supply chains, and the market is indispensable for many. According to this, 16% of the largest companies with annual revenues of 50 million euros or more are looking to withdraw from China. Among smaller ones with sales of up to €5 million, nearly one in five people assume China will strengthen supply chains.
Regardless of the size of the company, many mid-sized companies want to do business with the Ukraine (22%) and Russia (17). But Britain is also said to play a minor role in the supply chains of 15 per cent of companies due to the country’s exit from the EU.
According to the survey, two-thirds of companies want to rely on a larger network of suppliers to protect themselves against breakdowns or material shortages. More than half also want to expand warehouses. 38 percent are considering adjusting their production to reduce dependencies.
(dpa)
