News
13.11.2007Going global 2007: Success factors of German SMEs in international business
Baltic States and Ukraine with substantial future business perspectives
The German exporting industry is creating more and more new domestic jobs. Since July 2006 alone, exporting firms have established around 200,000 new employments in Germany, according to the survey Going International 2007 published by the German Chambers of Commerce and Industry mid November.
The excellent global positioning of many small and medium-sized enterprises (SMEs) is substantially contributing to wealth and employment in Germany as their home country. The degree of the international activities is high. Typical German SMEs (turnover 500,000 to 10 mill ) are active on 16 foreign markets on average. Even small firms with a yearly turnover of up to 500,000 work usually in seven countries abroad, whereas companies exceeding 50 mill turnover do business in 27 countries on average.
Motives to go global
The main motives for the going international are: Opening up of new markets (95 %), competitive environment (84 %) and the necessity to be near to the client (81 %). Cost-related reasons are named by only around half of the polled 3,600 firms, active outside of Germany.
The following issues are considered as key factors for business success abroad:
The foreign engagement of companies is closely linked to their expectance of market growth potential, not always lying in mega-markets. Thus the peak position concerning future business perspectives for the next two to five years is headed by the Baltic States with a positive balance of 68 % followed by Ukraine (67 %), Russia (62 %), China (56 %) and India (55 %).
How are German companies active abroad?
Even though the success of German companies active on foreign markets is related to a mix of activities it is still dominated by pure export trade (88 %), followed by the import of foreign goods and services (36 %), a rising share of sourcing activities (32 %), due to the international division of labour, and all kinds of cooperation (30 %).
Foreign activities's ranking of German companies
The importance of joint ventures in international business is often overestimated. Being the only possibility of entering Asian markets a few years ago, there are actually attractive alternatives to a joint venture. E-Commerce is playing a subordinate role in the b2b foreign business with 2 % in spite of its common rank.
