US Firms Taking New Interest in Germany | Business| Economy and finance news from a German perspective | DW | 30.08.2005
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US Firms Taking New Interest in Germany

The US is more interested in Germany as a place to do business than widely thought. But that may not necessarily translate into increased US investment -- at least not until German consumers begin spending again.


Even German cars don't enjoy the status they once did in the US

Over the past few years, Germany's image has an economic powerhouse has suffered considerably in the US. American cars are now considered more reliable than the hallowed Mercedes -- once considered the quintessence of superior quality and durability.

Even Germany's unemployment rate of more than ten percent is quite baffling to Americans more accustomed to their own jobless rates of five percent and lower.

Yet surprisingly, Germany is enjoying something of a renaissance in the US this summer. A recent cover of the British news magazine The Economist, which is widely read in the US, was headlined "Germany's Surprising Economy" and showed a picture of the national emblem of the country, the eagle, flexing its biceps.

"Solid potential"

Several experts confirm that Germany is once again on the radar screens of big US firms.

Robert Bergmann, representative of German industry in Washington, said that interest in Germany's economic muscle was set to increase.

"The American estimation of Germany hasn't changed fundamentally as yet. But there are definitively signs that there's solid potential in Germany," Bergmann said.

Joe Quinlan, chief strategist at the Bank of America agreed. "Contrary to some prejudices, Germany is an attractive market for US firms -- with healthy fundamentals and well-qualified workers, particularly in the field of technology," Quinlan said. "However I want more growth-oriented reforms. And the more growth there is, the more investment there will be."

Handy-Produktion bei Siemens

Die im Januar 2005 von Siemens veroeffentlichte Aufnahme zeigt die Produktion von Handys vom Typ M65 im Werk Kamp-Lintfort. Der neue Siemens-Vorstandsvorsitzende Klaus Kleinfeld schliesst einen Verkauf der schwaechelnden Handy-Sparte nicht aus. Alle Optionen seien offen, sagte Kleinfeld der "Welt am Sonntag", 6. Feb. 2005. (AP Photo, Siemens)

Quinlan added that Germany could look forward to big growth potential thanks not only to its highly skilled labor force, but also because of its geographical location.

"Right next to Germany there is a kind of mini-China -- central Europe," said Quinlan. "The low corporate taxes in eastern Europe and the well-trained workers there will drive forward European and German companies."

More domestic consumption needed

However, the US -- home to some of the world's largest companies -- does have one clear demand of Germany: more domestic consumption.

US experts on Germany agree that finally it's not just growing exports but rather bigger domestic demand that is a prerequisite for a sustainable economic upswing.

"Naturally the German soft drinks market is under strong pressure due to weak domestic demand," said Kay Falk from Coca-Cola Germany. But he added that his company had to try to buck the trend. "For our company Germany remains one of the most attractive markets in the world. That's why we're promising ourselves future growth."

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