Due to rising labor costs and quality problems, about 20% of German companies, or approximately 1,600 German companies with manufacturing operations in China are planning to leave.
According to estimates from the Association of German Engineers (VDI), some companies are searching for countries with lower wages while others are returning production to Germany.
Production costs in China have increased due to rising energy costs, stricter environmental rules, the elimination of many tax incentives, a lack of skilled workers and a strengthening RMB against the dollar.
In addition, wages in the past year have jumped by as much as 20%, driven by the country's 8% inflation rate.
China is already getting to be too expensive for some companies, who are now searching for other lower-wage countries, such as Bangladesh, India or Kazakhstan.
The companies that are most likely to return to Germany are those that have outsourced production due to cost considerations. These include the consumer goods industry and textiles, which are both produced in mass quantities.
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