Although German companies benefit from the internet, they make only moderate use of information and communications technologies. A new study by IW Consult highlights the internet’s role in the international business of German companies.
In 1887, Great Britain introduced a “Made in Germany” seal to underscore the inferior quality of German products. Today that seal stands for high quality, particularly outside of Germany. High-quality products are one reason for the success of German industry. That success is also reflected in foreign trade statistics, which consistently show German business ranking among the top three in the world.
The internet plays an essential role in this regard. This is confirmed by an IW Consult survey of 1,900 representatives of German companies, conducted at the end of 2013. The respondents were asked how many export deals were made possible only by the internet – for example, by allowing new business partners to find a company through its website. IW Consult used the survey responses to calculate the importance of the internet for German exports: Thanks to the internet, German companies earned nearly 200 billion euros from their foreign business in 2012.
- In that year, internet-driven exports allowed German industry to increase sales volume by 87.5 billion euros over existing export business. According to the survey, companies believe that the internet will become increasingly important for foreign sales over the next five years. Manufacturers expect internet-driven exports to increase by 60 percent; service providers anticipate an increase of 54 percent.
- In addition companies are using the Web to stabilise their successful export business. In fiscal year 2012, the internet enabled German companies to secure exports worth 110 billion euros. Of that amount, manufacturers accounted for 95 billion and service providers for 15 billion. Companies expect the internet to play an increasingly important role in stabilising foreign business over the next five years.
Other calculations by IW Consult reveal that the internet in Germany is responsible for one-fourth of the growth in German exports that has taken place over the past ten years. This significantly exceeds the mean for the 106 countries included in the study. An average of 16.6 percent of export growth can be explained by increases in domestic internet use.
However, the IW Consult analyses also show that German companies have been slow to open up the new markets in which internet use is increasing most rapidly (see chart). Emerging industrial nations like China, India, Turkey and a number of Eastern European countries are outperforming Germany in this regard. Germany is in danger of falling behind as it competes for important markets against young industrialised countries. Compared with other countries, Germany continues to underestimate the potential of information and communications technologies. This is particularly evident from the fact that it is not a leader in the use of those technologies. Only 84 percent of German companies have their own website, a smaller share than in several other European countries. If Germany is to remain a successful exporter over the long term, its companies will have to continue to adjust.
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