“Mittelstand”: The Backbone of the German Economy

Would you be able to name five to 10 German brands or companies? Most probably, you know or would have at least heard of Adidas, Allianz, Deutsche Lufthansa, BMW, Volkswagen (VW), SAP, and Siemens. The Nivea logo on the little blue tin in your cosmetics cabinet represents a world-famous body-care brand owned by Hamburg-based Beiersdorf. Audi as well as Porsche belong to the Volkswagen Group. According to Interbrand, a global brand consulting agency, in 2017, Mercedes-Benz (The Daimler Group) ranked the highest when it came to the most valuable German brands (ninth worldwide) (Interbrand n.d.).

Maybe not that visible as the DAX 30 queen bees…. but basically doing the greater part of the work: German Mittelstand

The aforementioned companies are all (currently) listed on the German stock index DAX (Deutscher Aktienindex), which consists of the 30 major German companies trading on the Frankfurt Stock Exchange. However, the backbone of the German economy is the so-called Mittelstand. Mittelstand, in German-speaking countries (Germany, Austria, and parts of Switzerland), commonly refers to small- and medium-sized enterprises (SMEs) with annual revenues of up to 50 million euros and a maximum of 499 employees (Institut für Mittelstandsforschung Bonn n.d.). Depending on its specific definition, “Mittelstand” can range all the way from small craft workshops to hidden champions worth up to a billion euros.

According to the online portal Die Deutsche Wirtschaft, the Mittelstand not only accounts for the majority of businesses in Germany (more than three million), but also provides some 60 percent of all jobs and over 80 percent of all apprenticeships. A study conducted by the portal has analyzed Germany’s most important medium-sized companies (Die Deutsche Wirtschaft 2016):

The results provide an interesting insight into the structure, distribution and relevance of the most important medium-sized com-panies in Germany. In this respect, turnover at the top 10,000 firms ranges from approximately 25 million to the ranking limit of 1 billion euros. The average turnover is 156 million euros. All in all, the top 10,000 companies account for roughly 1.05 billion euros in turnover and provide approximately 5.3 million jobs.

Die Deutsche Wirtschaft also found that most of the top companies are from the automotive trade, followed by mechanical engineering and construction. According to their research, 56 percent are to be classified as industry, 27 percent as service providers, and 17 percent as retailers (ibid). When ranked according to federal state, the largest number of the medium-sized enterprises (as described above) is currently based in North Rhine-Westphalia (2,300), followed by Bavaria (1,997) and Baden-Wuerttemberg (1,812) (Die Deutsche Wirtschaft 2018).

How may I help you?

You want to develop your business in Germany? Then you may also face some very common pitfalls; the good news is that they can be quite easily avoided! You should hire me if you want to gain a better understanding of your opportunities, and you value a local’s help in finding buyers and potential business partners. Learn more about some past projects and what I can do for you: You’ll make it in Germany!

You are (only) interested in learning more about Germany?

The focus of the book is to help readers understand how certain concepts and values influence the way Germans like to do business.
Doing Business in Germany: A Concise Guide to Understanding Germans and Their Business Practices

Above are snippets from my new book. You want to learn more about Germany? Then try to grab a copy of Doing Business in Germany : A Concise Guide to Understanding Germans and Their Business Practices. Either ask your bookseller to order a copy for you (might take a few days, though), or look out for it on amazon.