Current Economic Climate
Strength of Economy [3]: Germany has an extremely strong and developed social market economy. The GDP of Germany is $4.029 trillion and its GDP Purchase Power Parity (PPP) is $4.379 trillion. The nation has the largest economy in Europe and ranks 4th in the world based on nominal GDP and 5th by GDP (PPP). The service sector of the country accounts for 69.3% of GDP while the industry and agriculture sectors account for 30.1% and 0.6% respectively.
Economic Freedom Score [4]: The economic freedom score of Germany is 73.5. This makes it the 14th freest economy in Europe and the 24th freest economy in the world according to the 2019 world rank index. Germany has high business and financial freedom, which allows for dynamic business operations and a full range of services.
Top Industries and Companies
When people are asked about things they associate with Germany, they will state automobiles among their top three answers. There’s a good reason for this. German auto companies Volkswagen, Daimler, and BMW are the second, third, and fourth most valuable auto companies in the world, after Toyota [11].
Top Industries [7]: The top industries in Germany are the machinery, automobile, aviation, and chemical industries. The machinery industry is a driving force of innovation, such as in robotics, and offers many manufacturing solutions. The automobile industry of Germany is the largest in Europe and known world-wide. For the past twenty years Germany’s aviation industry has been on a constant rise, competing with “the US and Canada is its combination of cost efficiency, available talent, and a powerful manufacturing base” [7]. Thanks to the country’s education system and well-developed infrastructure and chemical research, the chemical industry in Germany leads in Europe.
Top Companies [1]: After the three auto companies already mentioned above, the next three top companies in Germany are Siemens, Bayer, and BASF. Siemens is a manufacturing and electronics company. Bayer is a multinational chemical, pharmaceutical, and life sciences company. BASF is a chemical company.
Top Occupations and the Employment Climate
Employment Climate [6]: Out of a population of 8.2 million, 3.1% of people are unemployed and 76.3% are employed. Minimum wage is 9.19 euros/hour and the average wage for high skilled labor is 3,550 euros/month. The retirement age for both men and women is 65.58.
Top Occupations [8]: The top 5 most sought after jobs in Germany are software developer and programmer, electronics engineer/electrician, healthcare worker and nurse, IT consultant/analyst, and economist/business administrator. These jobs are highly sought after by both Germans and foreigners. In fact, many young women in the Czech Republic pursue a nursing degree in order to earn high wages in the German healthcare industry.
Imports and Exports/Trade Partners [5]
Germany is the 2nd largest exporter in the world and the 3rd largest importer in the world. In 2017 it exported $1.33 trillion worth of goods and imported $1.08 trillion worth of goods. The country has a positive trade balance because they export more than they import. Germany is also a part of the EU, WTO, and OECD trade organizations.
Exports: Germany is a lead exporter of cars, vehicle parts, packaged medicaments & planes, helicopters, and spacecraft. Their top five export targets are the United States, France, China, the United Kingdom, and the Netherlands.
Imports: Germany imports cars, vehicle parts, crude petroleum, and packaged medicaments. The country primarily import goods from China, the Netherlands, France, the United States, and Italy.
Government Policies Affecting Business
The federal government of Germany is a key player in the German economy. The economy is influenced both directly and indirectly by the effects of government policies. Economic policies are created by three principal figures: the chancellor, the minister of economies, and the minister of finance. [10]
The Chancellor: The current chancellor of Germany is Angela Merkel. The most controversial policy she has passed was the open-door policy, allowing Syrian refugees into Germany. Though it is still too early to tell how this will ultimately effect the economy, at the moment there is a greater number of refugees accepting financial help then there are in the workforce [2].
The Minister of Economy: Peter Altmaier is the Federal Minister of Economic Affairs and Energy. The minister functions like the US secretary of commerce. He is the “primary channel for contact with industry, labor, and semipublic associations [10].
The Minister of Finance: Olaf Scholz is the Federal Minister of Finance in Germany. The minister is responsible for the federal budget and “accompanies the chancellor to the annual financial summits” [10].
Business Culture [9]
Sometimes it can be hard for foreigners to work in a German company. Once they understand the business culture of Germany, it becomes much simpler to adapt. Germans are very focused on the task at hand, value structure and rules, punctual, and try to avoid uncertainty, separate their private and public spheres, and they communicate directly. Because Germany is a very structure and rule-oriented culture, it makes sense that Germans place a higher emphasis on tasks in business operations. Contracts and written agreements are binding and there are strict penalties if not adhered to.
Punctuality is the key when doing business with Germans. It is better to show up 10 minutes early than being a couple minutes late. Being late is viewed as being extremely impolite. Germans also act quite differently in their private and public lives. Business dealings should be kept professional. They shake hands and never go for a hug or kiss like some other cultures do. Once someone is accepted into their private sphere, Germans are very warm and friendly. Germans are also very direct. Sometimes they may come off as rude, but they only state things the way they are. This is good in business because they won’t try to deceive others.
Daniela is an International Business major with an emphasis in German and Western Europe. She is studying abroad at Reutlingen University in Germany for Fall 2019.
References
1. Admin. “Top 10 Largest German Companies in 2017!” Welcome Center Germany, 28 July 2017, welcome-center-germany.com/top-10-largest-german-companies-2017/.
2. Clemens, Michael. “The Real Economic Cost of Accepting Refugees.” Center For Global Development, 14 Sept. 2017, http://www.cgdev.org/blog/real-economic-cost-accepting-refugees.
3. “Economy of Germany.” Wikipedia, Wikimedia Foundation, 12 Apr. 2019, en.wikipedia.org/wiki/Economy_of_Germany.
4. “Germany.” German Economy: Facts, Population, GDP, Inflation, Unemployment, Business, http://www.heritage.org/index/country/germany.
5. “Germany.” OEC – Germany (DEU) Exports, Imports, and Trade Partners, atlas.media.mit.edu/en/profile/country/deu/.
6. “Germany Productivity.” Germany Productivity | 2019 | Data | Chart | Calendar | Forecast | News, tradingeconomics.com/germany/productivity.
7. Otieno, Mark Owuor. “What Are The Biggest Industries In Germany?” WorldAtlas, 21 June 2018, http://www.worldatlas.com/articles/what-are-the-biggest-industries-in-germany.html.
8. Schayan, Janet. “Germany’s Most Popular Jobs.” Deutschland.de, 13 Mar. 2019, http://www.deutschland.de/en/topic/business/germanys-most-sought-after-jobs-these-professions-offer-the-best-prospects.
9. Schroll-Machl, Sylvia. “Understanding German Business Culture.” Expatica, Expatica, 18 Feb. 2019, http://www.expatica.com/de/employment/employment-basics/understanding-german-business-culture-100983/.
10. “The Role of Government.” Germany – Economy – The Role of Government, countrystudies.us/germany/140.htm.
11. Webber, Wayne. “The 10 Most Valuable Auto Companies in the World.” U.S. News & World Report, U.S. News & World Report, 8 May 2018, money.usnews.com/investing/slideshows/the-10-most-valuable-auto-companies-in-the-world?onepage.
International Business Experience 