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Consequences of war: Economist: Corporations have not reduced dependencies so far

Consequences of war: Economist: Corporations have not reduced dependencies so far

Large companies such as BASF and Bosch are investing billions in China – according to IfW President Holger Görg, this does not indicate a withdrawal from the People’s Republic.

According to an economist, German companies have not significantly reduced their dependencies on individual markets, even a year after the Russian invasion of Ukraine. “There is a discrepancy between what you hear and what is said and what companies are already doing,” said the acting president of the Kiel Institute for the World Economy (IfW), Holger Görg, the German Press Agency. The data does not yet show much of a diversification.

The recently announced billions in investments by large companies such as BASF and Bosch in China, for example, do not indicate a withdrawal from the People’s Republic, he said. This could be due to the fact that strategic decisions are being postponed in view of the current crises. “But of course it can also be because the problems for the individual companies are not as big as you think.”

However, with the Russian invasion, many companies realized that they had to rethink their dependencies and supply chains. Spreading risks, bringing production back to Europe a bit, producing more yourself – that’s what everyone is talking about now. “Three years ago, this awareness wasn’t as pronounced as it is now.”

Source: Stern

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