The first country to be affected by the coronavirus pandemic, China is now the first to move step by step towards economic recovery. For German mechanical engineering companies in China, the situation is continuing to normalize, according to the results of the third current VDMA survey of local member companies. Only 22% of companies still rate the impact of the coronavirus pandemic as major, compared to 46% in the April survey and 57% in the March survey. Around one in four companies (24%) now rate the impact as low, compared to 13% (April) and 3% (March). Selected sectors such as agriculture, construction, railroads and the pharmaceutical industry see only a minor impact from the coronavirus pandemic anyway.

Meanwhile, 30% of the almost 140 companies surveyed assume that they will achieve their growth target for 2020 after all. The optimism is based on the comprehensive government economic stimulus measures, which are clearly having an effect, the unexpectedly rapid recovery of the Chinese domestic market and new business opportunities that are emerging.

Supply chain eases

There is also a clear easing along the supply chains: In April, 66% of companies still reported major or noticeable disruptions, compared to 36% today. 49% see minor disruptions and 15% see no disruptions. The impact of the pandemic in Europe on companies in China is also rated far less critically than it was two months ago. A third (34%) of companies rate this as low, compared to 16% previously. For 42%, however, the situation in Europe remains a challenge: 48% cite delivery delays, 47% the lack of technical support and 35% the postponed decision-making processes as the biggest hurdles in the bilateral business environment. "In a crisis, important decisions have to be made. Some companies currently see potential in China, but are unable to exploit it because they are currently hardly being listened to at headquarters," reports Claudia Barkowsky, Managing Director of the VDMA in China.

Local machine manufacturers are also observing a change in their customers' investment behavior. 31% of customers are sticking to their original investment plans and 13% are even planning new investment projects. However, the majority (52%) are continuing to postpone their investments, with only 4% canceling them. "This gives us hope for a strong upturn in the first half of 2021, when the postponed projects will hopefully be realized after all," says Barkowsky.

The mood on the ground is clouded by the ongoing travel ban: 80% of respondents report a major or noticeable impact on their business. "Travel to China has been impossible for ten weeks now. An enormous demand has built up and we urgently need foreign specialists on site. A solution is urgently needed. Travel opportunities are essential for business, on both sides," Barkowsky demands.

There are still a number of limiting factors when it comes to international transportation, above all the significantly higher costs, especially for air freight. There are also capacity bottlenecks in some cases. However, rail freight transport to and from China has become a real alternative thanks to coronavirus.