AHK World Business Outlook Special survey on the COVID-19 impact

AHK World Business Outlook Special survey on the COVID-19 impact Results of a survey of German Chambers of Commerce Abroad, Delegations and Representative offices (AHK)

2 | AHK special survey Corona July 2020

Summary The worldwide effects of the COVID-19 pandemic are an enormous burden on the business of German companies abroad. Travel restrictions, lower demand for products and services as well as decreased investments worldwide are leading to a considerable loss of revenue.

As a result, companies reduce their employment and investment plans and search for new suppliers due to a lack of goods. Given the numerous economic and governmental challenges that have to be overcome in many countries, German companies do not expect a rapid recovery.

Revenue development 2020 NO CHANGE

INCRESASE IN REVENUE

8% 5%

DECREASE IN REVENUE

83%

Key results: 1. The extent of the crisis is immense: ▪ 63 percent of German companies abroad are affected by travel restrictions and 59 percent face a lower demand for their products and services.

▪ 83 percent of the companies expect a decrease in revenue, 15 percent at least by half.

2. The crisis is changing business: ▪ 56 percent are planning to invest less, 43 percent are reducing staff.

▪ 38 percent of the companies are searching for new suppliers, mainly in their own country.

3. The crisis lasts longer: ▪ 93 percent do not expect an economic recovery before 2021.

▪ 47 percent complain about a lack of support measures and 52 percent consider the rising government debt as a challenge to overcome the crisis.

The AHK World Business Outlook is based on a DIHK survey of the member companies of the German Chambers of Commerce Abroad, Delegations and Representative offices (AHK). The special survey on the effects of the COVID-19 pandemic in summer 2020 collects feedback from around 3,300 German companies, branches and subsidiaries worldwide, as well as companies with close relations to Germany.

48 percent of the responding companies come from the industry and construction sector, 34 percent from the service and health care sector and 18 percent are trading and logistics companies. Three percent are active in the healthcare industry. Smaller companies with less than 100 employees worldwide account for 49 percent of the responses. 24 percent of the companies employ between 100 and 1,000 people. Large companies with more than 1,000 employees account for 26 percent of those surveyed.

3 | AHK special survey COVID-19 July 2020

What effects of the corona crisis are currently placing a particular burden on companies?

63%

Travel restrictions

69% 59% 57%

Less demand for my products and services 47% 47%

Investments are postponed / cancelled

43%

Cancellation of orders

48% 33%

Cancellation of trade fairs / events

47% 31% 33%

Liquidity bottlenecks / lack of financing

29%

Problems in the supply chain / logistics

45% 16%

Missing goods / services

29% 12%

Own production losses / absence due to sickness Other

22% 4% 3% July 2020

April 2020

Expected change in revenue in 2020 83% decrease in revenue

July 2020

Decrease up to 10%

4%

13%

Decrease by 10-25%

Decrease by 25-50%

Decrease by more than 50 %

29%

26%

15%

8%

No Increase in change revenue

April 2020

No assessment

12%

5%

9%

31%

25%

14%

6% 3%

4 | AHK special survey Corona July 2020

Proportion of companies with expected decrease in revenue in 2020 and expected economic recovery

Eurozone

-83% 48%

North America

43%

-83% 47%

Eastern/Southeastern Europe

-85% 58%

Other EU 50%

35%

China

-80% 50%

-78% 43%

59%

South and Central America Africa, Near and Middle East

-83% 41%

Asia/Pacific (without CN)

-82%

55%

49%

-85% 43%

55%

37%

Revenue in 2020 2020

2021

2022+

Economic recovery

Investment intentions July 2020 10%

34%

April 2020 11%

July 2020 7%

56%

54%

higher

Employment intentions

constant

35%

less

April 2020

50%

11%

higher

43%

54%

constant

35%

less

25%

5 | AHK special survey COVID-19 July 2020

38% of the companies are increasingly searching for new suppliers, thereof in ...

Local / in country

63%

European Union

37%

Germany

31%

Asia / Pacific

18%

North America

11%

Rest of Europe incl. Turkey and Russia South America Africa / Middle East

10% 9% 8%

22% of companies are increasingly relocating their sites/production, thereof to ...

Local / in country

62%

European Union

21%

Germany

19%

Asia / Pacific

13%

South and Central America North America Africa / Middle East Rest of Europe incl. Turkey and Russia

10% 8% 7% 6%

6 | AHK special survey Corona July 2020

Relocation back to Germany/to the EU 7%

from South and Central America

5% 6%

from Africa, Near and Middle East

5% 3%

from North America

5%

from other EU countries, Switzerland, Norway

4% 4% 4%

from China

3% 1%

from Asia/Pacific (without CN)

2% ... relocation to the EU (excluding Germany)

... relocation to Germany

When do companies expect the local economy to recover?

Worldwide

7%

China

50%

15%

43% 59%

25%

Eastern/Southeast Europe (without EU, RU, TR)

7%

58%

Asia/Pacific (without CN)

8%

55%

Eurozone

9%

48%

43%

Africa, Near and Middle East

8%

49%

43%

Other EU, Switzerland, Norway

7%

50%

43%

North America 3% South and Central America 4%

47%

37%

50%

41%

Recovery in the course of 2020

35%

55%

Recovery in 2021

An economic recovery will take longer

7 | AHK special survey COVID-19 July 2020

What challenges do companies see for overcoming the economic crisis locally?

Rising government debt burden

52%

Lack of business support measures

47%

Travel restrictions

47%

Political environment

47%

Lack of investment from abroad

43%

Challenges in the health system

33%

Exchange rate Trade barriers / Preference for domestic companies Capital outflow

Imprint Publisher and Copyright Š Association of German Chambers of Industry and Commerce e. V. Postal address: 11052 Berlin | home address: Breite StraĂ&#x;e 29 | Berlin-Mitte Phone 030 20308-0 | Fax 030 20308-1000 www.dihk.de www.facebook.com/DIHKBerlin http://twitter.com/DIHK_News Editorial office Kevin Heidenreich http://twitter.com/B030 July 2020

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