German firms entering in the US market

GERMAN FIRMS ENTERING IN THE US
MARKET:
CHALLENGES AND OPPORTUNITIES
1

N O R A K O VA C S - G O D A
PA B L O G I L M A R T Í N E Z
S E R G I O S TA N G A
Nora Kovacs-Goda, Pablo Gil Martínez, Sergio Stanga 10/06/2011

LAYOUT
2

 INTRODUCTION

 OPPORTUNITIES & THREATS

 EXAMPLES

 HIDDEN CHAMPIONS

 CONCLUSION


German companies in the U.S:
3

 Strong bilateral relationship
 In 2007/2008 66% of the German companies registered high
sales

„The center of the world’s trade and investment economy”

 German business contributes to:
 U.S. economic growth and jobs
 U.S. economic health
 U.S. economic prosperity


German companies in the U.S:
4

 German firms employed approx. 615,000 people in 2008
 Wages are higher than the national average
Employment by Foreign-Owned Affiliates
1000
900
800
700
600
500
400
300
200
100
0

Sources: U.S. Bureau of Economic Analysis and Office of Trade and Economic Analysis

Foreign Direct Investment
5

 More than 3,000 German enterprises have investment in
the U.S.
 First ranking by Capital Stock Investment and R&D
expenditures


Future plans for the German companies:
6

 Barack Obama: massive stimulus package

 Create 2.5 million new jobs

 Infrastructure projects

 Focus on promoting green technologies

Germans are the beneficiaries


OPPORTUNITIES & THREATS
7

 Internal market:
 Geographic dimension:
 Area of 9,372,614 km2
 Distance of 4,500 km
 The population: 307.212.123 (2009)
 Threat: not product adaption

 Economic dimension:
 World's largest GDP (Gross Domestic Product)
 $14.3 billons in 2009 (1/3 of world production.)

 Corporate structure:
 Small and medium enterprises domination
(99.7% of all companies in 2003)
 Threat: High competiveness

8

 Legal framework:
 “Open and deregulated” in general.
 Restrictions: agricultural
properties, telecommunications, nuclear energy, mining and restrictions
on the acquisition of property.
 Foreign capital is subject to the same conditions as national.

 Foreign investment incentives:
 A foreign company have the same benefits and obligations as a U.S.
company
 Foreign Direct Investment
 EU investment flows to the US in 2008: €121.4 billion
 US investment flows to the EU in 2008: €50.5 billion

 Threats: necessary high knowledge in U.S. Law & Tax.


9

 Currency:
 €1=$1.4508
 Propensity to import:
 European Union
 NAFTA (Canada and Mexico)
(2003, China has overtaken Mexico )
 Trade in goods
 EU good exports to the US in 2009: €204.4 billion
 EU goods imports from the US in 2009: €159.8 billion
 Trade in services
 EU services exports to the US 2009: €119.4 billion
 EU services imports from the US in 2009: €127.0 billion


Big German companies in U.S:
BMW North America
10

 1975 effort to be released in the U.S., focusing on the IMSA Series. Result: the
number of people who knew BMW Bayerische Motoren Werke meant were much
higher.
 70´s: new serie 5 because of clients demand
 1980: they sell 895 units.
(During the next years BMW won reputation because of the competitions cars and M1
serie.)
 1986: new M3 and Deutshe Tourenwagen Mastes champion, growing their
reputation .
 In following years, the reputation of the brad will grow improving,innovating and
creating new models… reinforcing their reputation alway with Car tournaments.

 Case of the BMW Serie 5 GT :
 8,000 units expected.
 2,848 real units sell.

 Error: Not choose BMW Serie 5 family.
 “The director himself has said that potential buyers wanted the Serie 5 family opted for the Serie 5
GT, but the result is that buyers have absorbed the Serie 7 ($ 14,000 more expensive)”


German Biomass Companies in the U.S. Market
11

 2nd German American Energy Conference.

 German Energy Agency GmbH
 The German American Chambers of Commerce

 US and the European Union: strong policy incentives to
support bioenergy development.


HIDDEN CHAMPIONS
12

 Herbert Simon

 “Mittelstand” or SMEs
(=small and mid-sized enterprises)

- UNKNOWN
- LEVERAGE OF OBSCURITY


HIDDEN CHAMPIONS
13

 CHARACTERISTICS:

 OWNERSHIP AND
GOVERNANCE STRUCTURE
BASED ON FAMILY BUSINESS

 LONG-TERM RELATION WITH
KEY STAKEHOLDERS

 LONG-TERM ORIENTATION (NICHE FOCUSED)

 FOCUS ON OPERATIONAL EFFECTIVENESS


HIDDEN CHAMPIONS
14


HIDDEN CHAMPIONS (EXAMPLES)
15

 SAP has sales and development locations
in more than 75 countries worldwide.

 Fresenius is a global health care group
with products and services for dialysis,
the hospital and the medical care
of patients at home.

 The core business of the Würth group is the
global trade with connecting and assembly
technology that is implemented through an
international network of group companies.

CONCLUSION
16

 Large single market:
 Challenges
 Opportunities

 340,000 export companies 600,000 jobs
 100,000 FDI for Americans


SOURCES
17
 German American Chambers of Commerce (Deutsch-Amerikanische Handelskammern)

 German American Trade Magazine

 H. Simon, Hidden Champions, Lessons from 500 of the World’s Best Unknown Companies

 http://www.manufacturingnz.org.nz/news-and-info/latest/?a=19364 (How Germany’s hidden champions stay
ahead in the global economy)

 http://www.arpem.com/racing/bmwsport/r_bmwsport_p.html

 http://www.google.com/#q=bmw+company+history+eeuu&hl=en&prmd=ivns&tbs=tl:1&tbo=u&ei=m97wTfnGO
8vfsgbY04SIBw&sa=X&oi=timeline_result&ct=title&resnum=11&ved=0CHIQ5wIwCg&bav=on.2,or.r_gc.r_pw.&
fp=3c571b42131dab45&biw=1280&bih=642

 http://www.amchamchile.cl/sites/default/files/Guia%20Doing%20Business-rev.pdf

 http://ecologic.eu/3564

 http://www.olafbohlke.com/public/Top50GermanCompaniesUSA.pdf


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