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Some executives like Mr. Haeusgen are embracing transformation, testing new strategies and markets. Other businesses, however, are wary of abandoning a model that for decades enabled Germany to thrive but defied change.

Hawe’s handling of international affairs is not just a concern for its 2,700 employees. The economies of some German towns depend on it.

In Kaufbeuren, a brightly painted Bavarian town nestled below the Alps, Hawe is a top employer. In the tiny village of Sachsenkam, 60 miles to the west, Hawe provides 250 jobs — the next largest employer is the local brewery, with a staff of 17.

“It’s like we were successful for too long,” said Stefan Bosse, the mayor of Kaufbeuren, who is keen to attract other businesses to diversify the employers his town relies on. “Now, gradually, we see: ‘Uh oh — this is not a given. This can also be endangered.’

The archetypal Mittelstand company is based in a rural German town, making a piece of equipment few have heard of, but that is crucial for goods worldwide — like a screw needed for every airplane or passenger car.

The government, too, has a poor record in shedding outdated practices — like its labyrinth, paperwork-based bureaucracy. In 2017, it vowed by 2022 to digitalize its 575 most used services, like company registrations. A year past that deadline, said Mr. Bianchi, only 22 percent of those services are online.

“The German business model, particularly Mittelstand, is being extremely good at doing one thing: Slowly but steadily perfecting one product,” said Mathias Bianchi, spokesman for the German Mittelstand Association. “Because that worked so well for years, they had no need to adapt to changes. But now, they need to adjust to the new economic reality.”

Even as the tech revolution and climate change added strain in recent decades, Germany’s model plodded profitably along.

But the pillars it relied on to do that — cheap Russian natural gas and the Chinese market — are collapsing.

Staking out a socioeconomic transformation for the country, pledged by Chancellor Olaf Scholz’s coalition government, has become a source of national anxiety.

Like its population, Germany’s business owners and entrepreneurs are aging — the average Mittelstand association member is 55.

Some are resistant to adapting to new technologies and cling to a loyalty-based system that created lifetime employees — and customers

How Hawe and other midsize German companies navigate these new global forces will be critical to the country’s future prosperity. Though Germany’s 20th century success as the economic powerhouse of Europe is often seen through its biggest brands — like Volkswagen, Mercedes and Siemens — it is small and medium enterprises that are the backbone of its economy.

Such failures makes businesses wary of transformation plans the government says will be costly now, but will make Germany a diversified, digitized and climate neutral economy.

Over half the companies polled did not want to expand in Germany, and a quarter were considering relocating.

Marita Riesner, inspecting parts, said her heating costs spiked to 740 euros ($803) a month from 120 euros ($130). She and her neighbors are growing vegetable gardens to ease the pain of inflation as the country dips into recession.

“I was a very positive thinker before,” she said. “But these days, I’m sweating it. It seems a lot is going wrong.”

Should geopolitical events disrupt business with China, Mr. Haeusgen said, the consequences could eliminate more than half of Hawe’s jobs in Kaufbeuren. Currently, he said, 20 percent of Hawe’s business comes from China.

Some business groups raised alarm in recent years over Germany’s vast exposure to China — before the risks were taken seriously by former chancellor Angela Merkel’s government, which had heavily encouraged German-Chinese trade.

Today, some policymakers privately worry that an event like a Chinese attack on Taiwan would be an inescapable disaster for Germany’s economy. The government is now pushing “de-risking” by finding alternatives to trade with China.

The new socioeconomic model for Germany may be less about erecting pillars than managing an ever more intricate, international juggling act.

German officials say their strategy will maintain ties to China, but will counterbalance that by strengthening relationships with other nations, like India or Vietnam

The Mittelstand is doing the same: Hawe is investing heavily in India, where it plans to build a new plant, and other companies are looking to North America.

“It used to be that we made a majority of sales with three customers from China,” he said. “Now we have many, many smaller customers scattered all over the globe.

Instead of making a few parts at a huge scale, as cheaply as possible, Hawe must make a wide variety of parts for an array of customers, as quickly as possible.

But major brands like Volkswagen and BASF insist that China, as the world’s second-largest economy, is too important a market to give up. Such German-based multinationals are responsible for a 20 percent rise in foreign direct investment in China this year.

“Being able to live with and manage uncertainty and to handle complexity becomes, in my opinion, a core strength,” Mr. Haeusgen said. “The way my grandpa did it won’t work today.”