In the world of global industrial development, Made in Germany has always been synonymous with high-end and precision.
For a long time, the three pillar industries of mechanical engineering, chemical industry, and automobile have supported Germany’s export trade and economic fundamentals. Relying on its century-old technology accumulation and solid manufacturing foundation, it has long been ranked first in the world’s high-end manufacturing echelon.
However, in recent years, the global industrial landscape has been quietly rewritten.
With the all-round acceleration and rapid upgrading of China’s manufacturing industry, Germany’s original solid traditional advantages are constantly under attack, and the development resistance of the old industrial power is increasing. However, China’s industry is steadily breaking through. The gap in industrial strength between the two sides is continuing to narrow, and the industry competition pattern is ushering in new changes.
The pattern of the machinery and equipment industry has reversed, and the development pace of China and foreign countries has widened the gap.
Mechanical equipment manufacturing is the core strength of German industry and was once the key to Germany’s dominance of the global manufacturing market.
Before 2020, Germany had always ranked first in the world’s exports of machinery and equipment. With its excellent precision manufacturing technology, it has gained recognition from the global market. However, in recent years, the German local machinery industry as a whole has continued to be under pressure, and its development momentum has slowed down significantly.
Many well-established local companies that have been deeply involved in the industry for decades cannot keep up with the rapidly changing market pace due to slow technological updates and low production costs. As a result, business problems continue to emerge. The number of bankrupt companies in the industry continues to increase, and the overall market decline is obvious.
In sharp contrast is the rapid growth of China’s machinery and equipment industry. 2020 is a key turning point. China officially surpassed Germany and became the country with the largest export of machinery and equipment in the world.
What’s more worth mentioning is that the iteration speed of domestic manufacturing companies has completely broken the slow development model of traditional industries. In the past, the research and development and upgrade of a new equipment took at least two to three years.
Nowadays, domestic enterprises have greatly compressed the product update cycle by optimizing production technology, streamlining R&D processes, and improving industrial systems, and the market response speed is far faster than before.
In addition, high-quality human resources and the vigorous growth of local enterprises are also key to the rise of our manufacturing industry. There are a large number of hard-working and highly qualified industrial workers in the country, which provide stable support for industrial development.
At the same time, various specialized, new and high-quality enterprises cultivated by the state have taken root in various subdivisions, constantly breaking through technological bottlenecks, steadily improving the global competitiveness of China’s high-end manufacturing, and breaking the monopoly advantages of overseas enterprises bit by bit.
At present, Germany still retains its core advantages in the fields of high-end precision equipment and top craftsmanship, but its overall leading advantage is far less stable than before.
The dual track of automotive and chemical industry has been replaced, and the industrial strength of China and Germany has quietly changed positions
Automotive and chemical industry are two other core pillar industries in Germany. In recent years, they have also experienced structural changes, which most intuitively reflects the development differentiation of Chinese and German industries.
In the automotive field, the German automotive industry has experienced sluggish development in the past decade, with overall growth sluggish. The speed of innovation cannot keep up with the industry trends of new energy and intelligence, and the market development has reached a stagnant bottleneck.
In contrast, China’s automobile industry has achieved leapfrog development by relying on the country’s comprehensive policy support and seizing the development trend of new energy vehicles.
The sales volume in the domestic automobile market has been rising steadily all year round, and the scale of the industry has continued to expand. Not only has it stabilized the domestic market, export sales have also increased year after year, and its influence in the global market has become stronger and stronger.
The changes in the pattern of the chemical industry are also very obvious.
As a benchmark company in the German chemical industry, BASF’s large-scale chemical production base had more than 30,000 employees at its peak, representing the top level of the German chemical industry and a core symbol of German chemical industry’s global leadership.
But now, with the reshaping of the global chemical industry pattern, the industry status of this old leader is slowly being challenged. The core reason for this change is the gap in industrial investment between China and Germany.
In recent years, China’s chemical industry has maintained high-intensity and continuous investment. The annual industrial investment scale is basically twice the total investment of European and American countries.
Long-term and sufficient capital investment has provided a solid guarantee for the technology research and development, production capacity upgrade and market expansion of the domestic chemical industry, allowing China’s chemical industry to grow rapidly and successfully overtaking Germany in the field of product exports.
Germany is looking for a way to break the situation, and Sino-German industrial symbiosis has become the mainstream
Faced with the continued weakening of local pillar industries and the continuous loss of market share, Germany is also actively looking for ways to break the situation and wants to defend its industrial foundation.
At present, there are many voices in the German industry, proposing to imitate trade protection measures and resist external competition by imposing additional tariffs. This is similar to the EU’s previous move to impose tariffs on imported electric vehicles in an attempt to build a protective barrier for local traditional industries.
However, the disadvantages of this type of trade barrier are very prominent, which is also the key reason why German industry does not dare to try it easily.
Blindly setting up trade barriers can easily trigger large-scale tariff confrontations and bring about a series of negative chain reactions. German industry generally believes that trade conflicts will do more harm to local industries than normal market competition.
The fundamental reason is that the German industrial system and the Chinese market have long been deeply bound. German local companies are highly dependent on China’s consumer market, complete industrial chain supporting facilities and stable trade cooperation. Once the trade between the two sides is blocked, it will eventually backfire on Germany’s own companies and economy.
It is precisely because of this clear understanding of the current development situation that the vast majority of German industrial enterprises have chosen to delve deeply into the Chinese market, actively embrace China’s development dividends, and regard the Chinese market as the core position to break through development bottlenecks and achieve sustained growth.
Many leading German companies continue to increase their investment and layout in China and establish new production bases. BMW continues to improve and upgrade its production system in China and continues to delve into the Chinese market.
Chemical giant BASF has also established its core overseas production base, relying on China’s complete industrial supporting facilities and vast market space to continue to seek new development breakthroughs for the company.
Looking at the iteration of the Sino-German industrial landscape as a whole, it is not the outcome of a single market competition, but the inevitable result of differences in global industrial upgrading, resource allocation, and development pace.
Germany needs to rely on the Chinese market to break through development bottlenecks. China can also continue to improve high-end manufacturing technology in exchanges and competitions with Germany, and promote the steady development of its domestic industrial industry towards higher quality and higher levels.
