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Dr. Jan Hagen from the European School of Management and Technology, ESMT. | Made in Germany
Posted
August 15, 2011
Views
428
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August 15, 2011
428
2
0.47%
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3:26Now PlayingJan Hagen talk with us about the sources and risks of the"German profit machine".DW-TV: From lumber to semiconductors - quite a jump. For more on the ability of German companies to react to global needs, we're joined by Jan Hagen from the European School of Management and Technology. German companies seem to know the secret of success - what is it?
Jan Hagen: Well it's debatable whether it's a knowledge of the secret to success, but they certainly did something right in the past. One thing was to invest heavily in these growth regions we now see have been the backbone of the recovery, namely China. The other thing was to concentrate on high-quality products that don't face the cost pressures that other parts face.
DW-TV: The record profits we hear about these days are due in part to strict cost-cutting measures. How big a price does the workforce have to pay for Germany's booming businesses?
Jan Hagen: Well, I think the workforce certainly had to adjust and take some pressures. Overall I think the German industry reacted relatively responsibly. They focused on the qualification of the workforce, which allowed them to produce these high-quality products in the first place, and they focused on automation. That is something that we also saw in the report, that this was one of the secrets of success.DW-TV: The German economy is mainly driven by strong exports, i.e. foreign demand. How secure is this sector, given we're in the middle of a eurozone debt crisis?
Jan Hagen: I think the debt crisis is certainly having effects on the real economy. First of all it means that the financial markets won't allow governments to keep spending like they did in the past. And therefore it reduces the capability of governments to push up the economy by pumping money into the economy. So that isn't helping, and we'll definitely see some austerity measures in the future will certainly also impact the economy. And we see risks in the growing of markets like China, where we have an issue with inflation and we all see a real estate bubble building up.
DW-TV: What about Asia? For years now, companies have turned to China and India as new business partners - can they deliver? Are these countries a safe bet?Jan Hagen: Well certainly they still come with growth rates, but these high growth rates we've seen in the past are certainly something that are under risk right now.
DW-TV: Germany has also accumulated massive debt, and the bailout packages add a few billion more. How could that affect German companies?Jan Hagen: I think rather soon. I think we see a rise in interest rates recently. Germany hasn't been affected the way southern European countries have. But the bailout package is a huge burden in the future and will certainly raise attention of investors, and that will mean higher interest rates in the future.
(Interview: Monika Jones)
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