Basf's move to China: Economic struggles reshape German industry
For weeks, the media have reported that the chemical conglomerate BASF is considering relocating most of its production from Germany to China. However, the company denies plans to leave its homeland altogether, although it admits that future investments will be directed where the market is growing. This is mainly to the People's Republic of China.
Germany has been facing serious economic problems in recent years. Deindustrialization is particularly visible—the decline in the importance of those industrial sectors that have so far been the foundation of the economy. In this context, numerous reports about the plans of German companies appear in the media.
As Berliner Zeitung explained, in the face of escalating problems in the German economy, such as high energy prices, excessive bureaucracy, overregulation, and a lack of skilled workers, more and more companies are deciding to relocate production abroad.
Recently, there have been reports, including in the weekly magazine Focus and the news service Tagesschau, suggesting that the chemical giant BASF also plans to abandon Germany and focus on operations in China. Are they true?
Is BASF relocating production to China? The company has taken a stance
These reports were based on the fact that while BASF is reducing production and laying off workers in Ludwigshafen, Germany, it is investing £9 billion in a new factory in China. The company explained this decision with the problems above of the German economy, emphasizing that it made profits in all markets except the domestic one last year.
When Berliner Zeitung asked about BASF's future plans, a spokeswoman firmly denied that the conglomerate intends to completely leave Germany.
BASF is not turning its back on Ludwigshafen and Germany, and it does not plan to do so in the future—emphasized the company in a statement quoted by the German newspaper.
She added that in the coming years, the company will invest £1.8 billion annually in the maintenance, modernization, and expansion of the plants in Ludwigshafen, transforming them into Europe's leading low-emission chemical complex.
At the same time, the spokeswoman admitted that factors such as high energy costs in Germany are just one of the aspects considered when making investment decisions.
The growing involvement of BASF in China was explained by the fact that this country is currently the largest chemical market in the world, and by 2030 it is expected to account for nearly three-quarters of the global growth in chemical production.
The German industry is changing its face
BASF's plans are another signal that the German economy is undergoing significant changes. Last September, "The Economist" highlighted this fact. In its analysis, the Weekly emphasized that today, the German automotive industry seems to have an undeniable position. The European top performer produced 3.67 million cars last year—nearly a quarter of the approximately 16 million that rolled off the production lines of European factories. However, this is changing.
As many as three-quarters of the cars sold by German companies are produced outside the country. These calculations are the basis of the analysis published by The Economist.
The leading German brands are also facing challenges. For example, VW is present in the People's Republic of China but has only achieved a 2 per cent market share in electric vehicles. Previously, it was the leader in traditional car sales. Meanwhile, China is not resting on its laurels and is catching up in the competitive race. In 2022, it exported 3 million vehicles. This is more than Germany, which sold 2.6 million on foreign markets.
