German companies of all sizes are increasingly contemplating or executing moves to relocate operations abroad as they contend with the country’s sluggish economic growth and high operational costs. Recent examples highlight this trend, such as the Ulm-based garden tool specialist Gardena, which plans to cut 250 jobs—roughly 10% of its domestic workforce—while partially moving operations to the Czech Republic. Similarly, global chemical giant BASF has signaled intentions to shift service roles to India, placing significant pressure on its Berlin-based operations.
The scale of this shift was highlighted by data from the Federal Statistical Office covering 2021 to 2023, which recorded that approximately 1,300 German firms with more than 50 employees relocated business functions abroad. This figure represents 2.2% of all companies of that size in Germany as of 2023, with the relocations contributing to a loss of about 50,800 domestic jobs. While many observers feared an acceleration of this trend, the state-owned development bank KfW has identified a conflicting movement: many medium-sized enterprises are actually withdrawing from international business. KfW research shows the number of such firms active abroad fell from roughly 880,000 in 2022 to 760,000 in 2023.
Dirk Schumacher, KfW’s chief economist, attributed the decline in international trade to deteriorating global conditions, citing geopolitical tensions in Ukraine and the Middle East, rising export competition from China, and protectionist trade policies in the United States. Conversely, the Association of German Chambers of Commerce and Industry (DIHK) reports a different outlook, noting that industrial cost pressures have reached record highs. DIHK spokesman Sven Ehling noted that 43% of industrial companies now plan to increase foreign investment this year, a three-percentage-point rise from the previous year.
According to Volker Treier, head of international trade at DIHK, companies are being forced to invest abroad primarily as a cost-cutting measure rather than for expansion, which often results in domestic job losses. Treier also noted that ongoing tariff disputes with the United States are fueling uncertainty and causing businesses to delay critical decisions. However, Professor Steffen Müller of the Leibniz Institute for Economic Research Halle (IWH) suggests the situation is less extreme than portrayed. He noted that direct investments abroad are currently well below peak levels, with Bundesbank statistics showing annual transaction values of €120 billion between 2017 and 2022, compared to €80 billion in 2024 and under €100 billion in 2025. These figures, according to Müller, offer little evidence that capital is flowing out of Germany at a significantly higher rate than in previous years. “Germany’s industrial crisis is running at full speed,” wrote the online magazine Finanzmarktwelt in November, citing figures from the Federal Statistical Office from 2018 to 2023. More recent figures have yet to be published by the office.
Should I stay or should I go? Given Germany's high cost and sluggish growth, some business leaders are mulling relocating, or at least investing abroad. DW has a look at the numbers.
Last year, the situation was described in even more dramatic terms.
