Business Destination Germany 2018 | KPMG | DE

Business Destination Germany 2018 – Germany as an investment paradise

Business Destination Germany 2018

German companies are more attractive for foreign groups than ever before. The number of mergers and acquisitions is skyrocketing. Why this is the case and what investors are planning for the future.

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Managing Partner International Business

KPMG AG Wirtschaftsprüfungsgesellschaft

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The trend is clear: foreign companies invested EUR 40 billion in German businesses five years ago. EUR 93 billion was invested last year – more than twice as much capital. At the same time, the number of greenfield investments, i.e. new market entries, declined slightly. The name of the game is "purchases and acquisitions instead of new establishments". In particular, China has significantly stepped up its investments.

Practically all foreign companies located in Germany are targeting expansion. 95% are planning to invest in their German operations over the next three years. In fact, one-third are planning investments exceeding ten million euros annually.

These are the results of KPMG's "Business Destination Germany 2018" study, for which we surveyed 529 CFOs at German subsidiaries of foreign groups. This study is a new edition of the Pilot we brought out two years ago.

 

They've come to research

"Companies that have committed themselves to Germany view the economic development here as being extremely favourable," says Andreas Glunz, Managing Partner International Business at KPMG in Germany. Four out of five companies view Germany's economic situation as "good" or "very good". The outlook for companies' own development is similarly positive: 68% rate the opportunities for the next three years as "very good" or "good".

However, they are coming to Germany not only because of the huge domestic market. "The amount of research is unusually high. 30% of foreign companies conduct research in Germany, and yet this is usually a core competence of the foreign parent companies", points out Andreas Glunz. Notable reasons cited for this include the broad research landscape and excellent skilled staff. Digitalisation is playing a significant role in attracting companies to Germany. For two-thirds of the foreign groups affected by digital transformation, Germany plays a key role in pushing their digitalisation. Germany is considered a pioneer in the next industrial revolution, known as Industry 4.0.

 

Advantage of decentralisation 

As the study shows in graphic presentations, investors have developed different regional preferences depending on their country of origin. While a strong Japanese cluster has established itself in and around Düsseldorf, China is similarly represented in northwestern Germany.

"In contrast to France or the UK, it's not only the capital city region that attracts investment. Thanks to small and medium-sized companies rooted in the German regions and a decentralised research landscape, highly innovative clusters are spread out across almost the entire country. Such diversity is a huge advantage for Germany," says Andreas Glunz. 

We have compiled all our findings and conclusions for you here free of charge.

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