Competition from Chinese companies is becoming a much broader operating issue for German industry, according to a new DIHK survey of around 1,300 businesses. Across the industrial respondents, 83% said competitive pressure from Chinese firms is increasing, with half describing it as strong or very strong.
The result matters for the Mittelstand because the pressure is no longer limited to German companies selling inside China. Chinese manufacturers now compete in European and domestic markets across machinery, components, vehicles and other sectors that have traditionally supported Germany's export model.
Companies are trying to adapt rather than exit
DIHK says 88% of businesses do not consider withdrawing from contested fields to be an option. Instead, 60% are focusing on product innovation, 50% on cost reduction and 39% on finding new sales markets. Another 31% are increasing cooperation with Chinese partners.
That mix shows why a simple decoupling narrative is inadequate. China can be a competitor, customer, supplier and production base for the same German company at the same time.
Domestic cost disadvantages amplify the external pressure
Survey responses also point to energy, labour costs and regulation in Europe as part of the problem. A German manufacturer may believe a Chinese competitor benefits from subsidies or market barriers while still recognising that its own cost base makes the gap harder to close.
For Mittelstand firms, that creates a two-sided strategy problem: improve productivity and differentiation internally while also pushing for trade rules that address market distortions externally.
The policy preference is European, not national isolation
Two thirds of respondents want a united EU approach to China, while 55% support stronger measures against market distortions even if those actions impose some costs on their own businesses. That is a notable level of support for trade-policy intervention among firms that also depend on Chinese inputs and customers.
The survey does not tell us which companies will win the adjustment. It does show that China competition has become central enough to German industrial strategy that future Mittelstand research needs to track it alongside finance, energy and succession.