According to a report published by the State Bank KfW, nearly one in three small and medium-sized enterprises (SMEs) in the industrial sector intends to move production abroad within the next five years.
The KfW’s “Internationalization Report,” reported by “Welt am Sonntag”, revealed that eight percent of SMEs active in foreign trade have already relocated parts of their production overseas over the past five years. Furthermore, 29 percent plan to do so in the coming five years. KfW Chief Economist Dirk Schumacher cautioned in an interview that this trend serves as a clear warning sign, as even if only half of these businesses follow through with their plans, the future will see much greater relocation than observed in the past. He attributed this to the domestic location losing its attractiveness.
Furthermore, international revenues for SMEs have remained stagnant since 2022, with growth now exclusively coming from the European market. SMEs view the EU market as their largest source of opportunity; nearly a fifth of all responding companies (19 percent) are aiming to focus their exports more heavily on the EU internal market, or have already done so. Among industrial businesses, this figure is higher, with almost a quarter (24 percent) pursuing this strategy. The findings are based on responses gathered in January from 1,700 companies, including approximately 600 businesses that maintain an international presence.
