Secrets of German Success

Thursday, November 1st, 2012

If you examine the phenomenon closely, there’s a curious aspect to the current European economic crisis, whose most outstanding (but not sole) manifestation is the sovereign debt crisis. I mean looking beyond the threat to the common European currency, to where you see a marked imbalance in economic fortunes. Things are bad – very bad – in Spain, especially in Greece, but in Southern Europe (and Ireland) in general, but then things are rather good in Germany and its own ring of associated economies, the Dutch and the Austrian, but also the Polish (and Slovak) and to a lesser degree the Czech.

Why is that? Hermann Simon is a German, and also Chairman of the Board at the consulting firm Simon Kucher & Partners, and he put forth his ideas in a substantial article that appeared in Germany’s newspaper-of-record, the Frankfurter Allgemeine Zeitung, a few weeks ago. Actually, his piece is but an hors-d’oeuvre to the ideas he sets out in his new book – in German only.

The one-phrase summary for Germany’s success – and that book’s title – is “Hidden Champions.” Germany is overwhelming dependent, not on its domestic demand, but on its exports. The business establishment there is very good at that game. But it’s not large firms which are responsible – Simon mentions that even France has more companies in the Fortune Global 500 than Germany – but rather the smaller firms (famously known as the Mittelstand) that do killer export business even though most people have never heard of them – the Hidden Champions. Of the 2,734 names on the list Simon compiles of them, fully 1,307 are German (and many of the rest are Austrian or Swiss).

How do they do it? Simon conveniently (unluckily?) lists thirteen reasons: (more…)

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