The air is becoming thinner for Germany as a business location in global competition. Company bosses agree on this. At the Ludwig Erhard summit, some revealed where they now see the best opportunities.

How well is Germany doing as a business location and what opportunities and risks lurk in the USA, China and other markets? These questions were discussed by Rainer Barthel, chairman of the lighting manufacturer Osram, Siemens chief inventor Annemarie Große Frie, Audi board member Renate Vachenauer and Rüdiger Kaub, chairman of the construction machinery manufacturer Bauer on the first day of the Ludwig Erhard Summit at Tegernsee, organized by the Weimer Media Group and The Bavarian Economy (VBW and Bayme VBM).

Everyone agrees that it is premature to say goodbye to Germany as a business location. “I can still sleep well,” says Barthel, “we are still competitively positioned in Germany.” Vachenauer lists advantages such as legal certainty, social security and the high level of education and her colleague Große Frie from Siemens goes even further: “Germany is for Research and development is a great location.” The Siemens manager also likes to recall the Nobel Prize for Medicine, which was won in 2022 by the Swede Svante Pääbo, who has been researching at the Max Planck Institute in Leipzig for decades.

But all panel participants also agree that “the air is getting thinner,” as Barthel puts it. “When I look at our locations in China, there is an impressive amount of work and innovation there.” But that doesn’t scare anyone: “The Chinese pace is impressive, but we don’t have to hide,” says Vachenauer, pointing to 20 new electric car models that Audi has in the pipeline. “We are investing billions of euros – not just in ourselves, but also in our suppliers.” German companies have also learned to benefit from China’s strengths. “We have been active in China for more than 30 years, and we have had a factory near Beijing for more than 20 years,” says Kaub, “so we can also close the price gap with our Chinese competitors.”

The keyword that everyone likes to use for this is “local for local”, i.e. producing products where they will ultimately be sold. This works well not only in China, but also in the USA. “In this respect, a re-election of Donald Trump as president would actually be good for us,” says Barthel for Osram. This applies equally to his manager colleagues on the stage at Tegernsee. “The USA is a very important growth market for Audi,” says Vachenauer, pointing to a 50 percent increase in sales of electric cars there last year. “No matter who sits in the White House, the signs point to more nationalism and protectionism,” says Große Frie.

A conflict is also brewing on the other side of the world that could seriously affect German companies if China actually attacks Taiwan militarily, which Chinese President Xi Jinping has stated several times as a goal. Every company from Germany has to find different ways to deal with this.

“We have already played through the scenario,” says Kaub. Equipment that Bauer previously stored in China has already been redirected to Singapore. “We monitor our inventory in China very closely so that in the event of a crisis we don’t have too many goods there that we can no longer access.” Osram also has scenarios for a war in the South China Sea, “but we still have “We couldn’t find a way to prepare ourselves well,” says Barthel.

The mechanical engineering company Bauer has already set its sights on new markets. “Before Corona, we were completely focused on China. After the multiple crises since then, this is too risky for us,” says Kaub. To compensate, Bauer is now expanding in India. There they meet many Chinese competitors who are relocating production facilities to the subcontinent in order to be prepared in the event of US punitive tariffs against goods from China. “It’s like mass tourism,” says Kaub with a smile.

However, German companies are not only looking for new markets geographically. “The biggest market of the future will be the topic of sustainability,” says Siemens chief inventor Große Frie. Artificial intelligence is also important for them. What Germany has to do to be successful there? “We need to invest more in education so that a next generation grows up that can take on their responsibilities.”