Germany: The Powerful Business Sectors

We all know that Germany has one of the most powerful economies in the world; nothing can prove that better than the numbers and statistics which have led Germany to be a member of the G8, the group that represents the leading industrialized nations.

Going back over the numbers, we can see that Germany was ranked number 3 in the world when it comes to exporting services, and number 1 when it comes to merchandise up until 2009 before it got surpassed by China. It is also the fifth economy in the world, when ranking by GDP adjusted for PPP.

One of the reasons for this success is the powerful logistics and supply chain management sector: In the 2010 Logistics Performance Index published by the World Bank, Germany's infrastructure and its overall logistics performance were ranked No. 1, generating over EUR 200 billion annually, making perfect use of the centralized position in Europe and connecting the east to the west (prnewswire.com).

This dominance got even stronger with the Deutsche Post AG purchasing DHL and taking full control in 2002, a world wide leader in express delivery that has foreign presence all over the globe with tens of thousands of employees in 220 countries and territories. Therefore providing an example of FDI through Mergers and Acquisitions.

Another major German leader in transportation is Lufthansa with worldwide presence and subsidiaries in supporting industries like the Hawker Pacific Aerospace who is a part of Lufthansa Technik Landing Gear Division, specializing in gear overhaul and repair and located in Sun Valley, California.

Prnewswire.http://tinyurl.com/4rp64e4

Added to that, the country processes a workforce with high technical skills, specialized knowledge and a very sophisticated infrastructure which gives it a national competitive advantage and also enforces the factor proportions theory, and represents the basis of trade and worldwide presence.

Another sector that represents the success of FDI is manufacturing with 18% of the project share according to fdi markets in Table 1.2.1, and mainly car manufacturing, ranked second in the world, only Japan produces more. This sector has pursued an aggressive policy in the past few years like following clients and establishing plants in foreign countries: BMW in the USA and Audi in India, or following rivals as well as clients like Mercedes did when it opened a plant in Alabama.

But the lion's share comes from sales, marketing, and support with % 35 of the country's FDI. Led mainly by car sales of course, but also by companies like the discount food store Aldi that has over 9500 stores worldwide, 1135 of which in the US alone. Or the world famous Deutsche bank with locations in over 70 countries, which continue to grow in North America and Asia. The global investment bank focuses on corporate finance, commercial real estate, cash management and more.

Part of the sales share comes from the chemical industry with products such as plastic and pharmaceutical, and with it being number one in Europe, it dominates the trade within the continent. In 2009, this industry alone generated EUR 109.4 billion in exports and EUR 86.5 billion in imports.

If we put together all these elements, we can see how well they apply to some theories of international trade like factor Conditions: The labor force is very well educated, highly technology oriented. The main natural resources consist of coal, natural gas, uranium, construction materials, timber, copper, and arable land. Added to the fact that the climate is somewhat moderate, and no natural disasters have been recorded lately, it makes the basic factors adequate for success. The history and experience gained over the years within some industries, mainly the automobile manufacturing has led to advanced factors as well. And by being able to produce more in quantity and efficiency, it can sell and expand more, therefore achieving economies of scale.

Going back to the geographical positioning of Germany in Europe, and its proximity from Great Britain and the Atlantic, this represents good demand conditions oversees, added to the already sophisticated local consumers which helps improve these industries.

All these sectors that we have seen support each other; they provide input and a market for each other.

Government has played its role in this