Around 820 member companies from the Asia-Pacific region and Greater China participated in the semi-annual survey conducted by the German Chambers of Commerce Abroad (AHKs). The term Greater China includes the People's Republic of China, Hong Kong, and Taiwan, which form an economically connected unit.
Worse only during pandemic times
Just over one-third of the surveyed companies (35 percent) rate their current business situation as good, while 18 percent consider it bad. Only during the 2020 Covid-19 pandemic did businesses assess the local situation more negatively. Expectations for the local economy have dimmed compared to spring 2024. Nevertheless, just over half of the companies (51 percent) expect an improvement in their business over the next year. Only 8 percent anticipate a deterioration.
Confidence and high investment readiness in India
"Our companies in Asia-Pacific, despite the current downturn in many locations, remain undeterred and, on balance, are optimistic about the future," summarizes Volker Treier, Head of Foreign Trade at the Association of German Chambers of Commerce and Industry (DIHK), regarding the new results.
The confidence is particularly evident in India, where two-thirds of companies expect the local economic situation to improve over the next twelve months. India remains the driving force for investments in Asia-Pacific, with 51 percent of companies planning to increase investments over the next year. This makes India a major attraction for foreign – including German – investments, just behind the Philippines (52 percent).
In the Philippines, 58 percent of companies rate their current business situation as good (compared to 50 percent in 2023), while in Malaysia, 54 percent of companies share this positive outlook (2023: 39 percent). Both countries show significant improvement compared to the previous year.
Greater China: Investment plans in decline...
In contrast, investment readiness in Greater China is declining significantly, especially in mainland China, where just over a quarter of companies (28 percent) plan to reduce their investments over the next twelve months. Although the business situation has slightly improved, investment plans have been scaled back considerably compared to the previous year. The diversification away from China into other Asia-Pacific markets continues to progress.
Across the Asia-Pacific region, 51 percent of companies view weak demand and 42 percent see exchange rate fluctuations as the biggest challenges. In Greater China, three-quarters of businesses rate low demand as the most significant business risk. In India, it is mainly raw material prices, exchange rate volatility, and the shortage of skilled labor that concern companies.
...competitive position under pressure
The weakening competitive position in mainland China is also a worrying trend. Here, 47 percent of companies report that their competitiveness has deteriorated, especially compared to local competitors. In Taiwan and Hong Kong, these negative assessments are less pronounced. In India, Vietnam, and Indonesia, on the other hand, companies have recently been able to strengthen their local competitiveness.
Sustainability as a "booster"
Sustainability requirements have proven to be a crucial positive factor that strengthens competitiveness. DIHK Foreign Trade Chief Treier stated: "Sustainability requirements have become a booster for the competitiveness of our companies on the ground." At the same time, companies see rising competition both locally and from third markets. In Greater China, many companies also report disadvantages in the local market, which impair their competitiveness.
Download the full report: AHK Asia-Pacific Business Outlook Fall