Foreign Investments 2025: Trends and Challenges for Enterprises

The DIHK report “Foreign Investments of the Industry in 2025” reveals that German industrial enterprises are increasingly withdrawing from their domestic market and shifting investments abroad amid high costs, geopolitical risks, and declining competitiveness. North America is emerging as an attractive destination, while Asia is losing favour.

Declining competitiveness, high energy costs, and global risks are shaping industrial investment decisions at the beginning of 2025. Increasingly, enterprises are choosing to invest abroad—not for expansion but for cost pressures and domestic challenges. The DIHK special evaluation highlights affected sectors and regions, key motives, and how the gap between foreign and domestic investments is widening significantly.

Key Findings from Foreign Investments 2025

40% of manufacturing companies plan foreign investments – slightly less than in 2024.
Cost savings remain the main motive (35%) – as significant as during the financial crisis.
The balance of foreign investments slightly rises to +9 points, yet remains clearly below the long-term average (17).
The gap between foreign and domestic investments reaches 26 points – a warning signal for the German Chamber of Commerce and Industry (IHK).
Particularly small companies invest significantly less abroad (30%).
North America gains significance, while Asia-Pacific (excluding China) markedly loses its appeal.
Among firms investing abroad driven by cost reasons, domestic investments (-30) and employment plans (-39) show sharp declines.

Foreign investments remain below previous levels

In 2025, 40% of industrial enterprises plan investments abroad—a slight decrease from the previous year (42%). Small businesses (up to 200 employees) face challenges, with only 30% planning foreign investments, much less than before the pandemic. Large enterprises, however, continue strong international engagement, with 80% investment readiness.
The decline highlights the restricted investment capacity of the industry due to high costs, weak economic conditions, and global uncertainties.

Cost pressure dominates investment decisions

Page 5 makes clear that cost savings are the primary driver for foreign investments (35%). This level has rarely been reached since 2008. Energy-intensive sectors even state 47% of their investments are cost-related.
Sales and customer services, meanwhile, lose significance (only 35%, previously 48%). This demonstrates a shift: international engagement is serving less for market development and increasingly for avoiding high domestic costs in Germany.

Domestic investments collapse – Germany loses as a location

According to the graphic on page 3, the balance of domestic investments decreases to –17 points, while foreign investments rise to +9 points. The 26-point gap is exceptionally large—a warning signal for Germany's attractiveness.
High energy prices, bureaucracy, taxes, approval procedures, and skill shortages mean businesses are prioritising foreign expansions instead of German-based developments.

Investment motives by company size and sector

Small enterprises (<200 employees): focus heavily on sales and customer services abroad (43%).
Large enterprises (>1000 employees): primarily invest for market expansion (47%).
Energy-intensive industries: heavily affected by high costs—this sector increasingly shifts activities abroad (cost-driven).

Many sectors are adopting the principle of “local for local”: production is increasingly established directly in the target market, resulting in fewer ripple effects for Germany as a location.

North America gains – Asia loses appeal

North America (USA/Canada/Mexico)

Investment share rises from 45% to 48%.

Over 60% in mechanical engineering and automotive industry.
Reasons: low energy costs, attractive taxes, local-content rules, safeguarding against trade conflicts.

Eurozone remains the strongest region

64% invest in the Eurozone—stable development.
Currency area and single market continue providing high planning reliability.

Asia-Pacific (excluding China)

Sharp decline: from 33% to 21%.
Especially manufacturers of capital goods are withdrawing.

China

Decline to 31% (previous year: 33%).
Investment plan balance falls from 25 to 14 points.
Reasons: geopolitical risks, local requirements, supply chain uncertainties.

South and Latin America

Moderate increase (19% → 21%).
Market expansion remains a central motive (41%).

Africa, Near and Middle East

Slight increase (13% → 14%).
Particularly electrical engineering shows growing interest.

Risk: Value creation loss domestically

Businesses investing abroad due to cost reasons show alarming figures:

–30 points in domestic investments
–39 points in employment plans

Thus, Germany risks erosion in industrial value creation.
The report reveals: location factors like energy prices, labour costs, taxes, and approval times increasingly act as a “push factor.”