German businesses add value to components and raw products. Germany usually imports in these commodities:. For a more detailed drill down you can look here. This means that if you have a product that has a cost or quality advantage over European products, it is certainly possible to do business in Germany.
This gave Germany a trade surplus of billion dollar. Germany is a leading exporter of machinery, vehicles, chemicals, and household equipment thanks to the hard work of its highly skilled labor force. To have this in numbers:. Despite the recent decline in foreign direct investment, Germany is still an attractive destination for international businesses. In , sectors that invited most foreign investments were:.
Entering the market in Germany can be tricky due its customs regulations and the procedures at the bureaucratic level. Also, there are several restrictions on importing farm products after the European Union adopted Common Agricultural Policy. The distribution structure in Germany is business to consumer. It comprises of suppliers, distributors and retailers. Hypermarkets are rare, and commodities usually reach target consumers through independent retailers.
Also shown is the percentage share each export category represents in terms of overall exports from Germany. Pharmaceuticals was the fastest grower among the top 10 export categories, up by 8. In second place for improving export sales were miscellaneous chemical goods via a 3. The following types of German product shipments represent positive net exports or a trade balance surplus for Germany has highly positive net exports in the international trade of cars and automotive parts.
Below are exports from Germany that result in negative net exports or product trade balance deficits. Yet today, many of those industries, such as wireless and microelectronics, have migrated overseas, taking jobs and innovators with them.
The dominant post-war paradigm, namely that technologies invented here would naturally be produced here, has now eroded. Its ongoing support for large-scale practical industrial research for small and large companies has helped keep factories and jobs in Germany.
Yet if we are to exploit the opportunities in new manufacturing technologies, the United States might consider adapting some of Fraunhofer's best practices to improve the flow of innovation to SMEs, which form the heart of America's manufacturing infrastructure.
One thing is clear. Countries that lose their manufacturing base risk losing their ability to innovate. Against the background of an economic environment which has seen the erosion and offshoring of traditional industries in the face of global competition, the German model, or some parts of it, warrants careful consideration. This is an abridged version of the original article published in the November issue of Mechanical Engineering magazine. Charles W. Workforce Blog: Equity in Engineering Matters.
ASME Membership 1 year has been added to your cart. The price of yearly membership depends on a number of factors, so final price will be calculated during checkout. How Does Germany Do It? Nov 13, by Charles W. Major infrastructure capital expenditure and funding sources. Source: Fraunhofer Annual Report, An important factor in German SME manufacturing success is the Fraunhofer-Gesellschaft Fraunhofer Society , an independent nongovernmental organization that provides high-quality, short-term, affordable applied research that small and medium-size firms could not otherwise afford.
In addition to its scale and distribution structure, there are several other factors that account for Fraunhofer's success: Together, Fraunhofer's 60 institutes specialize in more than research areas. Each institute is paired with a university with similar research interests. The institutes themselves are very well equipped.
Most operate multiple pilot manufacturing lines and demonstration facilities. The German machine tool industry often provides equipment for testing and training, so the Fraunhofer tool set is current and the firms using it receive valuable feedback. Fraunhofer's model is a classic government-industry partnership. The federal and state governments, private contract research, and publicly funded contract research each provide roughly one-third of its funding.
The reality is more complex, since a substantial amount of "industry" research can be funded through government grants and incentives. Even if the private sector share is sometimes overstated, it is the stability of the funding that is important. German political parties usually consider support of applied research, of direct relevance to their companies, to be a part of the national infrastructure, like water or electricity.
A great advantage of the German innovation system is the emphasis on vocational education that combines academic studies with factory apprenticeships. This continues to yield a highly trained and technologically adept work force that is the envy of the world.
Fraunhofer mirrors this dual system at the highest educational levels. Graduates typically spend from three to six years at Fraunhofer before moving on to positions in industry or academia. This ensures a ready supply of well-trained researchers with hands-on experience in critical industrial technologies. Fraunhofer holds the rights to thousands of patents and registrations.
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