China's lockdowns are a heavy burden on German machine and plant manufacturers - slack in the order books

Created: 05/10/2022, 1:48 p.m

China's industry is suffering from the corona lockdowns - and with it the German machine and plant manufacturers (symbol image).

© Li Ziheng/XinHua/dpa

German machine and plant manufacturers in China are groaning under the consequences of the zero-Covid policy.

Expectations for the current year are modest.

Munich – German machine builders in China are groaning under the consequences of Beijing’s strict zero-Covid policy.

Almost every second member company active in the People's Republic had to completely cease operations due to the restrictions, the Association of German Mechanical and Plant Engineering (VDMA) announced on Tuesday.

In 40 percent of the companies affected, operations were idle for more than three weeks.

Expectations for 2022 are muted.

Of the 850 VDMA member companies based in China, 28 percent rated the current business situation as poor.

According to the VDMA, the mood was still much more positive in the autumn.

In autumn 2021, a total of 55 percent of companies complained about factors slowing down production; the current figure is 87 percent.

98 percent of the companies affected by corona measures report operational challenges.

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The resumption of production, especially in Shanghai, is going "very slowly", explained the managing director of the VDMA in China, Claudia Barkowsky.

An elimination of the bottlenecks is not yet foreseeable.

In Shanghai, a good 600 companies were recently allowed to resume production under certain conditions.

But most complain about an interruption in the supply chain.

According to a recent survey by the EU Chamber of Commerce in China, 92 percent of member companies across all industries reported disrupted supply chains.

This means that they neither get enough raw materials and components delivered to their plants nor can they sell their own products to the normal extent.

German machine builders in China: slack in the order books

The problems are also reflected in the capacity utilization of the companies and in the order books: 37 percent recently recorded production capacity utilization below the long-term average, in autumn it was still 14 percent.

A third of the companies also reported that incoming orders were lower than in previous years.

Only 24 percent of the companies recently assumed that the business situation would improve in the current year.

On the other hand, 29 percent expected the situation to deteriorate, while 47 percent initially expected no change in the situation.

After the mechanical and plant engineering companies based in China achieved growth of around 21 percent last year, according to the VDMA, companies are expecting growth of just three percent this year.

In the autumn, the companies had at least assumed an increase of ten percent.

At that time, companies still assumed that the Chinese government could contain outbreaks and minimize the impact on the economy, Barkowsky explained.

"It doesn't look like that." (AFP/ck)