Company survey: Despite the slump in exports, German corporations see themselves as crisis winners

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Germany is an export nation.

A good part of our prosperity depends on exports, which is why the number seems so dramatic at first glance: According to the Federal Statistical Office, German exports fell by 9.3 percent last year, to 1204.7 billion euros.

There has not been such a violent crash since 2009.

But the figures released on Tuesday also contain a glimmer of hope.

Because as drastic as the decline in the year as a whole is, the developments of the last few months are also positive.

And more than that.

The large German corporations in particular are now extremely optimistic again, far more so than companies in other countries.

This is shown by a survey by the consulting company EY among 2,400 companies worldwide that is exclusively available to WELT.

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The decline in exports is mainly due to the slump at the beginning of the pandemic in March 2020. After that, however, exports increased for eight months in a row - most recently in December by 0.1 percent compared to November, as the latest figures also show.

The plus was small, but the fact that there was any increase surprised most economists.

You had recently expected a renewed decline.

Exports to the Far East and the USA are increasing

In particular, exports to China and the USA developed significantly better than expected, increasing by 11.6 percent and 8.4 percent in December compared to the same month last year.

"For the export-dependent German industry, this gives hope for a good year 2021," says Michael Holstein, chief economist at DZ Bank.

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And the decision-makers in these companies apparently see this in exactly the same way, as the current survey by the consulting company EY shows.

It was held between November and January among board members, managing directors and senior managers from 2,400 companies, 153 of them in Germany.

Source: WORLD infographic

According to her, 56 percent of the large companies in Germany expect that this year they will return to the level of sales from before the crisis.

That would be much earlier than economists are forecasting for the economy as a whole.

Last year the gross domestic product in this country collapsed by five percent, for this year the federal government is currently expecting an increase of three percent.

Because retail, gastronomy, tourism, tour operators and the other industries affected by the lockdown are still in a permanent coma, and there is no end in sight.

But at the same time another part of the economy is booming, especially the manufacturing industry.

And this is doing significantly better in the crisis than its global competitors.

With more momentum out of the crisis than the competition

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Because worldwide only 46 percent of large corporations expect to reach the pre-crisis level of sales again this year.

"German companies expect that they will emerge from the crisis with more momentum than their global competitors," says Constantin M. Gall, partner at EY.

The decisive factor for this is apparently that the German corporations, according to their own statements, coped with the problems of the pandemic much better than their competitors.

For example, 61 percent of German corporations consider themselves more stable than the global competition; globally, only 43 percent can say that about themselves.

Source: WORLD infographic

The difference in financial development is even more drastic.

Exactly half of the German corporations surveyed consider themselves to be in a better position than their international competitors.

Globally, however, only 24 percent say this about themselves.

There is only one point where German companies come off average, and that is definitely indicative: in digital transformation.

During the pandemic in particular, many companies found that they were lagging behind the international competition.

"By now everyone should have understood that the digital transformation has to be implemented much more quickly," says EY partner Gall.

Backlog in digital transformation

And in fact, many plan to do so.

Although German companies want to focus their investments on customer loyalty in the future, investments in digital transformation will follow immediately afterwards, as the survey showed.

However: worldwide this area is number one on the investment agenda, well ahead of everything else.

Gall therefore also warns German companies not to miss this trend.

“It won't work in the future without a functioning digital business model,” he says.

"The digitization surge brought about by the pandemic will be a dominant trend in the years to come."

However, it is possible that German companies primarily want to solve this problem by simply buying up the relevant companies.

As the survey also showed, 64 percent of German companies are planning a takeover this year.

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The appetite has even increased compared to the corresponding survey from a year ago and has now reached the second highest value since 2010.

Germany is the number one target country for investments

This is in contrast to global developments.

Because globally, only 49 percent of corporations want to buy another company instead of the previous 56 percent.

That is well below the average for the past six years.

If they want to do that, then in this country.

Because worldwide Germany is the number one target country for investments by major global corporations.

The USA followed in second place, ahead of Great Britain, France and India.

In this respect, too, the German companies differ from their competitors.

Home is the most popular investment destination for them too.

This is followed, however, by France, Great Britain, Italy and Sweden - all European countries.

"Value chains are increasingly being optimized under the aspect of regional proximity, which is a lesson from the pandemic," says Gall, "the European Union with its closely interlinked economies and Germany in particular will benefit from this."

Nine out of ten companies expect growth in Europe

In addition, the future economic development in Europe is assessed as surprisingly optimistic.

According to the survey, 92 percent of the major German corporations surveyed believe that their company will be able to achieve the strongest sales growth on their own continent in the coming years, while only percentages in the low single-digit range remain for the rest of the world.

Europe is also in first place among the surveyed companies from other countries, but only with 39 percent, ahead of the Asia / Pacific region with 30 percent, South America with 13 and North America with 11 percent.

"The high expectations of Europe may come as a surprise when you consider how hard many countries were hit by the pandemic," says Gall, "but from the point of view of many business leaders the catch-up effects will apparently compensate for this as soon as the economies open up again."

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Of course, the companies also see risks for the all in all quite positive view of their own future.

The development of the pandemic is the top priority worldwide - but not in Germany.

Source: WORLD infographic

While 29 percent globally name this as the greatest danger, in Germany it is only 16 percent.

This confirms the finding that the large corporations in this country are relatively little affected.

The leading German companies, on the other hand, consider the macroeconomic development in general and the geopolitical tensions between larger markets in particular to be much more important.

That is only logical, because, as I said, Germany is an export nation.