SMB Owners Take a Swipe at Germany: Too Much Red Tape, High Energy Costs, and Lack of Digitalization
Smaller and mid-sized businesses (SMEs) rate Germany's location unfavorably - Least Productive Nation in the Union
Small and medium-sized businesses (SMBs) in Germany have some pretty harsh words for their home country, rating it poorly in terms of business conditions. In a survey conducted by Forsa for Commerzbank, Germany ranks down in 9th place among economic nations, trailing behind Italy and Vietnam.
Only 10% of the 1,525 SMBs surveyed between November and February considered the conditions in Germany as 'very good' or 'good'. A whopping 60% consider them 'satisfactory' or 'adequate', while nearly a third (29%) rate them 'inadequate' or 'insufficient'.
The survey reveals a stark reality: the 'Made in Germany' quality label, once a source of pride, has significantly lost its luster. A majority of 71% of the surveyed companies across all industries believe that it has significantly lost its significance.
But what specific issues are causing these poor ratings?
- Excessive Bureaucracy: SMBs lament the over-burdening red tape, which they feel hinders Germany's competitiveness as a business location[1][2].
- High Energy Costs: Energy bills are another significant concern, impacting operational expenses and profitability[2].
- Digitization Gaps: Gaps in digitization are also a major issue, seen as crucial for remaining competitive in the global market[2].
- Declining "Made in Germany" Importance: Many SMBs are concerned that the "Made in Germany" quality label has lost importance, which could affect their international competitiveness[2].
International trade tensions are another source of worry for SMBs. The ongoing trade dispute with the USA adds to the uncertainty, with many companies actively seeking new sales markets for their products and planning to increase their prices to offset higher tariffs[2]. Sectors such as metal, automotive, and machinery sectors expect particularly strong negative impacts from US tariffs and counter-tariffs[1].
The potential for EU counter-tariffs could further complicate the situation, potentially leading to higher costs and reduced competitiveness for SMBs[2]. However, the EU has temporarily halted planned counter-tariffs, hoping for a negotiated solution[1].
References:
- "Germany ranks 9th in business conditions among economic nations" (Source: Forsa survey for Commerzbank)
- "SMBs cite excessive bureaucracy, high energy costs, gaps in digitalization, and loss of 'Made in Germany' significance" (Source: Enrichment Data)
- The policy of excessive bureaucracy in Germany, as reported by small and medium-sized businesses (SMBs), is a significant concern that hampers the country's competitiveness as a business location.
- Vocational training could be a potential solution to address the gaps in digitization, which many SMBs consider crucial for remaining competitive in the global market.
- In light of the ongoing trade dispute with the USA, SMBs are actively seeking new sales markets and planning to increase their prices to offset higher tariffs, demonstrating the impact of global politics on business finance.
- The decline in the importance of the "Made in Germany" quality label, as perceived by SMBs, is concerning as it could affect their international competitiveness.5.Financial institutions, such as Commerzbank, could play a pivotal role in providing adequate financing to SMBs to help them navigate through the challenging business environment characterized by high energy costs, trade tensions, and digitization gaps, thus fostering a more positive business outlook in Germany.
