German firms start reducing China reliance amid Berlin-Beijing tensions
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German companies like ebm-papst are starting to reduce reliance on China due to tensions between Berlin and Beijing. They are concerned about potential disruptions from sanctions or a conflict over Taiwan.
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Ebm-papst is launching a "Decoupling China" program to ensure its Chinese operations can function independently. It's also planning a new plant in India to supply the rest of Asia.
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The German government unveiled a strategy to de-risk economic ties with China, but lacked binding targets. Mittelstand companies have started reducing China reliance in various ways.
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Some firms are pursuing localization strategies where each region becomes self-sustainable. Others are diversifying suppliers, investing more in India, Vietnam, and Southeast Asia.
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While China remains vital for German firms, there are signs of more investment in alternative markets like India and Vietnam to mitigate risks. Companies aim to produce in China for China, while supplying other markets from different regions.