German engineering companies relocate their development capacities to Asia

July 15, 2015 | News Germany

Until now, research and development activities of German engineering companies tended to focus mainly on the home market. But these companies are in the process of changing their thinking – and China, in particular, comes to the fore. Thirteen percent of companies are already planning the establishment of new research, development and construction departments in that country, while only 9 per cent of companies want to establish further R+D capacities in Germany. These are the results of a study by the Staufen AG consultancy together with the German Engineering Association (VDMA). The survey involved 138 companies in this industry.

There is no doubt that China has long become the most important foreign market for German engineering companies – companies generate more than €16 billion per annum in this market. But development activities in China do not yet fully reflect the immense importance of this market. “It still tends to be the case that machines and equipment for China are predominantly constructed and developed in Germany,” explains Staufen AG’s Dr. Andreas Romberg of Staufen AG and director of this study. “However, more and more engineering companies recognise that they cannot grow any further in the Chinese market with products ‘designed in Germany’. For that reason, they are planning the establishment of development departments on site in China in order to develop machines and plants specifically for the local market.”

In total, about one in three of the more than 6,000 German engineering companies is already involved in research, development and construction in foreign locations. A further 23 percent is currently planning the development of such locations. While it is true that activity far from home at present applies mainly to medium or large companies, numerous small companies also work on innovations abroad.

“Development and construction outside of Germany has become a necessity for the engineering industry as the largest industrial employer in Germany,” emphasises Dr. Frank Bünting, Head of Business Management at VDMA. “Nevertheless, companies are recommended to retain essential core activities within Germany and to structure cross-border development activities as efficiently and effectively as possible.” For example, standardisation and modularisation offer the option of developing platforms and modular components in Germany which then serve as the basis across the globe for the adaptation of products to local markets.

The study entitled “lean development and German engineering 2015” (Staufen AG and VDMA) can be requested from the following address:

Award and innovations forum for GERMAN INDUSTRY:
At the GERMAN INDUSTRY innovations forum in Stuttgart on 3 and 4 November 2015, experts from companies and science will show how medium-sized companies can make new products, services or business models ready for the market in a better and faster way. At the same time the “GERMAN INDUSTRY Prize for Innovation” will be awarded for the first time. Outstanding, application-related innovations from medium-sized companies will receive awards. Winfried Kretschmann, Prime Minister of Baden-Württemberg, is the patron.

For more information about the event, please go to:

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