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German, Austrian, and Swiss business concerns are known throughout the world. Volkswagen AG is the largest manufacturer of automobiles in Europe and one of the biggest firms in Germany. Adidas AG, founded by a German, is one of the most important makers of sportswear in Europe. Nestle AG, most famous for chocolate, is Switzerland’s best-known food and beverage concern, and next to Swissair [now “Swiss”] and Rolex, one of the corporate names most readily associated with Switzerland. But well-known giants like these make up less than ten percent of the companies in the German-speaking business world.
|Most German firms are small to medium-sized concerns like this pharmacy (Apotheke) getting a delivery by DHL (owned by Deutsche Post AG).
PHOTO © Hyde Flippo
Most German firms are small to medium-sized concerns, known in German as the Mittelstand. There is no direct English equivalent for Mittelstand, a term that goes back to feudal times. The German word refers not only to small and medium-sized businesses, but also to a common work ethic and to the middle-class business people who employ about two-thirds of the German work force. Although the Mittelstand was virtually eliminated in communist East Germany, it has existed in the German lands for centuries. Today, the Mittelstand accounts for about half of the total industrial production of Germany alone.
It may come as a surprise to learn that business and business people in German cultures are not usually accorded the same admiration and respect they might receive from the typical admirer of the entrepreneurial spirit and business acumen. This is particularly true in Germany, where the public’s regard for business has sunk to all-time lows, and where only seven percent of adult Germans own stocks (Britain: 20 percent; US: 35 percent). Germans also display their characteristic aversion to risk-taking by having only five to six percent of their savings invested in shares or mutual funds, only half of the rate in the 1970s. German companies that offer employees stock in their own company have had difficulty attracting more than 15 percent participation, while an average of 50 percent of workers in France and the US take advantage of such stock options. [See our Deutsche Telekom privatization page for current information about Germans and stocks.]
Find apartments to rent in Germany.
Until recently, basking in the glow of the German “economic miracle” (Wirtschaftswunder) in the decades following the 1950s, corporations and business people had quietly gone about their business, with little concern about their image or business realities. (There were, in fact, no German words for “image” or “public relations” – they had to be borrowed from English.) As a result of this complacency, and despite its apparent success and good reputation elsewhere, German business was largely a prophet without honor in its own land. In the 1980s, as joblessness increased and German innovations such as Mitbestimmung (co-determination), designed to increase industrial harmony and to reduce strikes, began to loose their luster, German business lost more esteem. In fact, some top German business people became the targets of terrorist attacks by extremists who felt the business leaders and their companies were harming society. The head of Deutsche Bank (Germany’s largest), Alfred Herrhausen, was assassinated by a bomb that destroyed his armored Mercedes in 1989. The fact that he and his company felt the need for an armored vehicle is itself an indicator of the climate of the time. (For more about Terrorism see Point 71.) Germany’s long history of distrust of business has helped keep such negative attitudes alive. This history may also help account for the “social market economy” model present in all three German-speaking lands. In this model a mix of private enterprise and government-controlled operations ensures that business is “socially responsible.”
Following German reunification, the debate about Germany’s economy, the third largest in the world, heated up. Anti-business terrorism continued when the head of the Treuhandanstalt (trustee agency) was assassinated in 1991. (For more about the Treuhand see Point 74.) In the mid-1990s, as some of Germany’s best-known corporations began cutting jobs by the thousands, and chancellor Helmut Kohl’s government was coming under increasing criticism for the poor state of the economy, he felt moved to tell his fellow Germans that they could not continue to live in a collective amusement park. He berated his constituents for being “soft” and urged them to get to work and renew the “Standort Deutschland” — roughly, “Germany as a place to do business.”
In response, Kohl’s critics pointed out that the German government was part of the problem. German business was suffering under the burden of too much taxation, too much red tape, too much government spending. According to Kohl’s critics, over-regulation was making the cost of doing business in Germany too high. The over-valued mark was another serious problem that the government had been too slow to address. The widely-publicized Steffi Graf tax-cheating scandal was just another symptom of what many believe to be Germany’s misguided tax policy. Most famous, wealthy Germans, from Boris Becker to Claudia Schiffer, had long ago moved to Monaco or some other tax haven just to avoid the kind of problems with the Finanzamt that landed Steffi Graf’s father/business manager in jail. Even less prosperous Germans were moving their money to Luxembourg and Switzerland to avoid the German tax collector.
|The skyline of Berlin’s Potsdamer Platz complex, just one of many business centers in the German capital. PHOTO © Hyde Flippo|
Others pointed out that German unions and employers – even the German psyche – were also to blame. There was not enough imagination and risk-taking; there was too little investment in research and development, and German workers were earning high wages for few hours (an average 38.5 hours per week and six weeks vacation plus 12 paid holidays a year). As a matter of survival, German businesses have been fleeing Germany in recent years for lower costs in other countries, including the US, Poland, and the Czech Republic.
About the only thing that everyone agrees on is that German business and industry need to become more competitive. And lately the Germans have been moving in that direction; the trend is for less direct government involvement. The privatization of former state monopolies such as radio and television, the railroad, the postal service, and Deutsche Telekom is a move away from the old German mind-set...
But, make no mistake, German, Austrian, and Swiss companies play a vital role in the European and world economy. Among the more influential companies are Germany’s Bayrische Motoren Werke (BMW), Daimler-Benz AG (Germany’s largest), Allianz Versicherungs AG (insurance), Continental (second only to France’s Michelin in tires), Siemens, Porsche, Adidas, BASF, Hoechst (chemicals), Braun, Bayer, Tengelmann (supermarkets); Switzerland’s Nestle, Swiss (airline), Sandoz (pharmaceuticals), Rolex, Swatch, Tag-Heuer (watches); and Austria’s Steyr-Daimler-Puch AG and Austrian Airlines.
American companies, such as Coca-Cola, McDonald’s, and Eastman Kodak, whose profits outside the United States account for about half of each corporation’s total, have long had a presence in German Europe. Chrysler entered into a joint venture near Graz, Austria in 1992 to manufacture minivans and the popular Jeep Cherokee for the European market.
German companies have also established a noticeable presence in the US. German Allianz owns Fireman’s Fund Insurance, Tengelmann owns the large A&P supermarket chain, Continental AG owns General Tire and Continental Tire. Miles Laboratories, one of the largest US pharmaceutical concerns, was originally a subsidiary of Bayer AG in Germany. In 1995 Miles changed its name back to Bayer, reclaiming a famous trade name Bayer had lost in North America following World War I. It is often difficult to tell the players without a scorecard... [More in the book]
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Book excerpt ©1999 McGraw-Hill/Passport Books
Web content ©1997-2012 Hyde Flippo
- Banks and Money
- Business and Economy with a list of German companies
- Cultural Differences - Germany vs the USA
- The Euro - Who uses it, history, facts
- German Money for Travelers
- Alfred Herrhausen - The terrorist assassination of this German banker shook the German business community in 1989.
- Business online in the German-speaking world (links)
- The privatization of Deutsche Telekom - Did it get risk-shy Germans to buy stocks?
- Travel to, from and in Germany/Europe
- Shopping in Germany - There are a few differences
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