German companies face relocation challenge

July 12, 2013 | BY

clpstaff

Rising labour and land costs and stricter environmental regulations have caused German manufacturers to look at moving inland, but they are finding it hard to pick the right location

According to the German Business Confidence 2013 survey by the German Chamber of Commerce, released last week, only 13% of companies based in tier one cities think it will be an attractive location for production in the future, compared with 26% of those in tier two cities.

But it is not as simple as companies moving inland. The top three locations for investment are Beijing, Shanghai and Chengdu. Wuhan and Xi'an were removed from the top 10 destinations in favour of Shenyang and Nanjing, which are closer to the coast.

“It is a complicated issue for German manufacturers'” said Michael Tan, a partner at the Shanghai office of Taylor Wessing, which has a strong German client base.

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