Brandenburg Gate, Berlin

Octoberfest, Munich

Potsdamer Platz, Berlin

Inter City Express (ICE) Train, Frank

Apprenticeship Programs

Electronics Trad

BMW 3-series Final Assembly, Munich

Awesome Castle and Snow, Schwanga

Proud Culture

Garzweiler Open Pit Mine

Wangen Tower Center

Subsidized Solar - Yikes

Christian Influence

Germany
A C O U N T RY A N A LY S I S

Germany Statistics
Europes largest economy
4th largest in the world
3.55 Trillion GDP*

$38,100 GDP/capita* (26th)

3% growth 2011, 0.4% 2012

2.5% inflation

1% Real Interest Rate

Population: 82 million
138,000 sq. miles (Montana)
Temperate climate
Language: German
Capital: Berlin
Currency: Euro
Founding member of EU
An up-market country
15

History Rich in Conflict (-)

Holy Roman Empire (1st Reich)
Napoleonic Wars
World War I
World War II Nazi Germany
Nationalistic, low migration
East and West Germany

West industrial powerhouse

Reunification

East struggling post communism

UN non-permanent seat 2011-2012
17

Cultural Tradition (+)

Strong Christian tradition (63% of population)
Das Lander der Dichter und Denker= the land of

poets and thinkers

Immanuel Kant & Albert Einstein

#3 music producer in the world today

Beethoven, Bach, Mozart, etc.
Work hard / play hard culture

Protestant work ethic

Oktoberfest, soccer

Work / life balance 1,419 working

hours / year!

Lowest in OECD
18

Germanys apprenticeship program

Apprenticeship Programs
trains 1.5 million people annually.

56% English speaking

19% earn University degrees
Challenged by dropping

19

Matches skills
with employers
needs

Manufacturing,
legal training

60% participants
obtain full-time
employment

Partners with
major
corporations

Slow, Steady Economy (++)

$3.55T GDP, 26th per capita

3% growth 2011, 0.4%
2012
2.5% inflation
1% Real Interest Rate

Strongest Economy in Europe

and 4th world wide

Growth stagnating after 3% in

2011

70% services, 29% industrial

economy

$1.5T in Exports (2nd), $1.3T in Imports

(3rd)

5.4% Unemployment
Overbanked market with

$4.2T in domestic credit (4th)

Competitive: 27 Fortune 500,
~1000 middle-market leaders
20

German
y

Political (+++)
Stable, safe, secure, and expensive

Political Powerhouse of the EU

Federal Parliamentary Republic

Multi-party system established in 1949

Dominated by the CDU and SPD

Free and open markets

Foreign Direct Investment 513 Billion in 2011- #7
Government subsidy for early-stage innovation
No restrictions on capital transactions or transfers
Much like a Volvo

Stable, safe, boring, secure, and expensive for what

you get
22

Germany and the EU ( +/- )

Largest member of EU
Contributes 21% of total budget
Instituted as economic handcuffs following WWII

Eurozone free trade increase addressable market and labor

pool

Chancellor Merkel walks a tightrope representing

the demands of her constituents and the EU

Germany is viewed as Europes America for

pushing tougher standards on the weaker members

of the EU (Greece, Spain, Ireland, etc.)

The curse of Power

23

Institutions & Infrastructure (+++)

24

Financial Markets, Taxes, Legal

12 Largest Stock Market and Exchanges:
o
o
o
o

Deutsche Borse $1.3 Trillion

3rd largest bond market
Total Financial Assets: $11.9 Trillion
Assets per Person: $145,090

Taxes reformed in 2008

o Average overall tax burden of 29.8%*

Strong Legal System

Ranked #1 for IP protection

25

Summary and
Recommendations

Doing business in Germany

Opportunities & Challenges / Risks

Growth Slowing
Euro-zone financial crisis
Primarily EU Trading partners

Highly trained and

disciplined work force

Stable Government
Excellent infrastructure
FDI encouraged / open
economy

Regulation and

bureaucracies can be
complex

Ease of repatriation of profits

High investment intelligence

Developed capital markets

Downward pressure on
exports

Safety regs zealously

applied

High corporate costs

Average corporate tax 29.8%

Low lending rates

English as a 2nd language

Imports at 19% to match VAT

Expectations of labor force

Former East Germany long

27

term prospects

Business Recommendations
Recommended Focus Area
IT Hardware / Software / Services
Cloud computing, mobile, security
sell to

4th largest IT market

Robust growth (5-20%)

Establish local GmbH

R&D focus with some high tech Manf.

High Technology develop
Joint venture: Siemens, Fraunhofer
Strong IP Protection for sensitive technology
R&D incentives
Manufacturing make in
Automotive sector
Abundant natural resources
Focus on quality, precision
Skilled workforce
Domestic and export market
Infrastructure, distribution networks

Central to Europe

Medical Equipment sell to

11% of GDP spent on Healthcare

Sales growth of 6% (2012)
US manufacturers already have 30% share

of imports
28

Focus on miniaturized electro-medical,

nano-technology, and minimally invasive
equipment
Take advantage of shifting demographics

Fragen?
(Questions?)

Backup, Ancillary Slides

German Introduction
Willkommen meine Damen und Herren,
Wir praesentieren Ihnen eine Laenderstudie

ueber Deutschland. Es freut mich

ausserordentlich, Ihnen die Herren Lengyel,
Louis und Mt Mc Clellan vorzustellen.
Vielen Dank!

31

Germanys Objectives & Strategy

What are Germanys objectives?
Protect from collapse of Euro?
Increase GDP growth
Control unemployment
ROI former East Germany
What is Germanys strategy?

Reduce dependency on exports

Innovation (continue apprenticeships)
Raise labor input
Growth friendly tax structure
Increase labor migration - immigration
32

33

https://www.google.com/publicdata/

Taxes
Taxes reformed 2008 to increase

competitiveness

Corporate tax cut to 15% from 25%

Average overall tax burden

29.83%*

A flat nationwide corporate income tax

rate of 15%.
Trade tax, which is a municipal tax, set
by each municipality individually at a
minimum rate of 7%, but there is no
statutory ceiling.

Tax burden can differ from

municipality to municipality.

Up to 10% less in certain areas

34

Global Competitiveness Index

Haiti
India
Vietnam

China
Peru
South Africa

35

Ireland
Singapore
Germany

German
y

UNDERVALUED?
36

Legal

Judges
Defendants convicted

20,411
807,81
5

First-instance proceedings
Civil courts
Family courts
Criminal courts
Convicted prisoners
Terminated cases of
supervised probation

37

1,579,
804
688,99
3
786,06
7
60,067
54,411

Ease of Doing Business

38

Germany scorecard
Historical context (-)
Cultural Tradition (+)
Social context (++)
Political context (+++)
Economic context (++)
Euro-zone context (--)
Institutional context (+++)
Infrastructure context (+++)

Overall doing business score (++)

39

Markets
Sector Market Size and Growth $M)
$140,000

14%

$120,000

12%

$100,000

10%

Large (~$100B USD) IT,

Chemical, Automotive, Telecom

markets
Robust 2011 growth slowing,
Automotive sector growth hardest hit
US share of imports in most markets
minimal
$30B Medical Equipment market
imports <1%, US share is 30%
German customers value quality
Market research is encouraged
High concentration of franchising
Government sales challenging
Entrenched incumbents

$80,000

8%

$60,000

6%

$40,000

4%

$20,000

2%

$0

0%

2012
2013
41

$3.114T GDP (5th @ PPP), 26th per capita

3% growth 2011, 0.4% 2012
2.5% inflation
#2 Exporter (after China)