Germany still is a key destination for international investors
Germany’s attractiveness as a location for international corporations is still at a very high level. In 10 of the 16 location factors we focused on, at least 40% of the surveyed companies see Germany at a minimum as among the top 5 countries in the EU. In addition, the confidence of Inbounds management has increased in view of the strong economic recovery across all industries: Two thirds (66%) of the respondents estimate their current economic situation to be at least good and 59% forecast a further improvement in 2022.
Challenges are rising
However, international corporation representatives also see many and varied challenges for Germany as a business location and have reduced their investment plans for the coming years. These come in the form of renewed deterioration in some key location factors compared to our survey two years ago and are a signifier of an urgent need for substantial reforms in these areas. The respondents consider the inadequate digital infrastructure and the non-competitive tax system to be among the biggest barriers to investment. In addition, there are deficiencies in the logistical infrastructure, a continued rise in energy costs, high labor costs with stagnating labor productivity and weakness in the implementation of innovations.
Andreas Glunz
Managing Partner International Business
KPMG AG Wirtschaftsprüfungsgesellschaft
Manifold business opportunities for international investors
In spite of this somewhat gloomy environment, there are also massive business opportunities triggered by the megatrends of digitalization, environmental protection and sustainability, as well as geopolitical developments and demographic change, with various industries in Germany undergoing a fundamental transformation process, which is being supported by politics in Germany and also underpinned by some massive EU funding programs. It is also very exciting for international corporations to participate in this situation.
Germany, in addition, is characterized by its strong family-owned businesses and innovative start-up scene bases. They both offer diverse opportunities that can be taken advantage of by international investors.
Germany on the move
Germany elected a new Bundestag on September 26, 2021. There are signs that the new federal government will be progressive, growth-oriented and investment-friendly, as well as be willing to make the aforementioned megatrends a priority for business and politics. In addition, funding measures of 130 billion EUR for modern technologies already agreed upon during the pandemic are likely to be significantly increased once more. Investments are made explicitly in future areas, such as the hydrogen economy, quantum technologies or artificial intelligence.
Industry analysis
Find out more about the results in your specific industry.
Renewable Energies
Turnaround in energy policy and promising hydrogen technology
Contact person: Michael Salcher, Regional Head, Region East, Head of Energy & Natural Resources
Automotive
Customer demand, digitalisation and environmental regulations forcing a business model change
Contact person: Goran Mazar, Partner, EMA & German Head of ESG and Automotive
Healthcare
Demographic challenges and the digitalisation push
Contact person: Axel Bindewalt, Partner, Consulting, Public Sector & Sector Head of HealthCare
Real Estate
A safe haven in turbulent times, new remote work environment; ESG and digitalization
Contact person: Dr. Hans Volkert Volckens, Partner, Financial Services, Head of Real Estate, Head of Asset Management
Mechanical Engineering
Industry 4.0; Research & Development in new business fields
Contact person: Ulrich Ackermann, Head of Industrial Manufacturing, M&A Tax, Regional Head, Region South West
Infrastructure, building & construction
Improvement of the poor logistics and digital infrastructure; adapting infrastructure to demographic trends and the new digital environment.
Contact person: Dr. Steffen Wagner, Partner, Global Head of Transport & Logistics
The German Mittelstand
Hidden small and medium-sized global champions undergoing a fundamental transformation
Contact person: Dr. Vera-Carina Elter, CHRO, Head of Family-Owned Businesses
The German start-up scene
Growing public and private support vs. lack of venture capital
Contact person: Dr. Ashkan Kalantary, Partner, Advisory, Deal Advisory, M&A, Venture Services
A wide variety of industries are currently undergoing fundamental transformation in the face of the megatrends of digitalisation, environmental protection, sustainability as well as geopolitical development and demographic change. This exogenous pressure for change is met by German policy, which has not hitherto been noted for its agility, in the opinion of international investors.
Specific investor views on Germany by country
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About the survey
Our biannual survey “Business Destination Germany 2022”, which is being published for the fourth time, again examines Germany’s most important characteristics as a business location in an EU comparison. We surveyed 360 CFOs of the largest German subsidiaries of international corporations from the most important investor countries in Germany. This alternative perspective offers an outsider’s view of Germany for both international investors and decision-makers in politics and business. This is extremely important because Inbounds in Germany generate around a quarter of Germany’s economic output and thus make a significant contribution to Germany’s prosperity.
