German companies are increasingly relocating production and services abroad, driven by high costs and sluggish economic growth. Gardena, an Ulm-based garden tools specialist, plans to cut 250 jobs in Germany and partially move operations to the Czech Republic, reducing its domestic workforce by 10%.
Major global players like BASF are also investing abroad. The chemical giant intends to relocate service positions to India, putting many jobs at its Berlin site under pressure. Between 2021 and 2023, around 1,300 German companies with over 50 employees moved business functions abroad, costing approximately 50,800 domestic jobs.
However, Germany's state-owned development bank KfW observes a different trend: many medium-sized companies are withdrawing from international business. The number of German medium-sized firms active abroad dropped from 880,000 in 2022 to 760,000 in 2023. Chief economist Dirk Schumacher attributes this to geopolitical tensions in Ukraine and the Middle East, growing export competition from China, and the protectionist trade policy of the US regime.
The Association of German Chambers of Commerce and Industry (DIHK) paints a contrasting picture. According to its business climate survey from early 2026, 43% of industrial companies plan foreign investments this year, up three percentage points from last year. DIHK's head of international trade, Volker Treier, cites rising costs, structural problems, and weak economic conditions in Germany as key reasons.
Historically, foreign investment strengthened domestic operations and boosted employment at home. But now, companies are forced to invest abroad primarily for cost reasons. The share of firms investing for market development fell from 30% to 28%. Treier notes that foreign investment now serves to cut costs rather than drive expansion.
Bundesbank statistics show annual direct investment values of €120 billion between 2017 and 2022, but only €80 billion in 2024 and under €100 billion in 2025. Economist Steffen Müller says these figures give little reason to assume significantly more capital is flowing out than in previous years.
Target regions for German investment are shifting. North America's appeal is waning, with the share of companies planning investments there falling from 48% to 44%. Meanwhile, engagement in Asia is growing: the share of industrial firms investing in China rose from 31% to 34%, and in the Asia-Pacific region (excluding China) from 21% to 26%. The eurozone remains the most important region at 64%.
Source: www.dw.com