German car manufacturers have seen an increase in car sales in China in last quarter. While the companies are happy that it offsets the fewer units sold in European countries amid the pandemic, they are also being cautious. A report in FT states that in last quarter, Daimler saw 23% rise in sales in China. Better known as Mercedes-Benz, Daimler is a German multinational automobile manufacturer.
The rich Chinese, who could not take foreign trips due to the Chinese coronavirus pandemic, bought luxury cars instead. While the corporates are elated, it has also raised concerns that the German industry is highly dependent on the Chinese market.
An October report in DW quotes Stefan Bratzel, head of the Center of Automotive Management (CAM) who had also said that it was only Chinese market that was currently recovering. Last year, VW had sold 40% of its vehicles in China. He says that while the Chinese market may be temporarily helping companies stay afloat, in longer term, the industry’s dependence on Chinese market makes it prone to blackmail.
With highest growth rate, China is quite likely to be largest single market in future. Which is why industries can’t just completely withdraw.
In fact, even German Chancellor Angela Merkel urged German businesses to diversify into Asian markets beyond China. Germany currently is one of the biggest economy in European Union. Other EU leaders like French President Emmanuel Macron has also suggested diversification beyond China.
At an event in October, Merkel said that as of now, about three-quarters of Germany’s Asia exports go to east Asia, and half of them go to China alone. German Economics Minister Peter Altmaier also suggested to look for markets beyond China. He suggested how Singapore and South Korea offer promising markets.
And while the economic divorce many not happen completely, the pandemic has definitely increased Europe’s dilemma to introspect its dependence on the communist country.