German mechanical engineering R&D shifts abroad

German mechanical and plant engineering companies are increasingly shifting their research and development (R&D) activities abroad, according to a survey by the VDMA (Mechanical Engineering Industry Association). While basic research often remains at domestic headquarters, market-oriented innovation and R&D resources are moving to international locations.

Among large companies with over 1,000 employees, 90 percent are already conducting research abroad, and 69 percent plan to expand these international activities. The shift is driven by declining revenues and high domestic operating costs in Germany. Significant investments are flowing toward locations in China, India, and the United States.

VDMA Deputy Managing Director Hartmut Rauen described the trend as a ‘clear alarm signal’ for Germany as an industrial location. The survey also highlights growing competitive pressure from China; 71 percent of respondents now identify China as their strongest competitor in innovation, a significant shift from previous years when the domestic market held the lead.