Monique Surges is CEO of the New Zealand German Business Association.
Can you tell me a bit about the SME landscape in Germany, and the role these kinds of companies play in the wider German economy?
I guess we should define a German SME, or Mittelständler, first as there seem to be big differences in the definition from country to country. According to the German definition an SME has up to 500 employees and up to €50 million annual turnover. The EU definition only takes into account companies with up to 250 employees and up to €50 million annual turnover. In New Zealand an SME has less than 20 employees, so it's a massive difference.
The hallmarks of a German SME are independence or family ownership; SMEs in Germany are highly respected and the attitude is to pass these entities on through the generations. They also have a commitment to this thing called German Mittelstand. They're some of the most innovative companies in Europe, taking a long-term view. They tend to have a high equity ratio and a cautious approach to expansion, but still undertaking mid to long-term investments, even in times of crisis.
Ninety-nine percent of companies in Germany fall into this SME category - that's 3.6 million companies. They employ 15.5 million people, or 60 percent of the workforce, so they're crucial to generating 52 percent of Germany's GDP.
These companies are also heavily involved in the German vocational training system called Duale Aussbildung - a system in itself that's now being exported to a lot of countries around the world. The system involves a time and financial commitment from SMEs to skills training of young people, both on the job and at training schools.
What do you think our SMEs could learn from their counterparts in Germany and vice versa?
To answer this you need to understand the differences in business methodology between the two countries: German businesses are more structured, take one step after another, and remain cautious as they go forward. New Zealand businesses are far more prepared to take a punt, lean out the window and see what might be around the other corner, but might miss what's happening on the road straight ahead.
I think New Zealand SMEs need to take a longer term view, get involved in supporting skills training of young people and put aside more money for research and development to take their clever inventions to the next level. And German SMEs should possibly let loose occasionally and take on some of the New Zealand 'can do' attitude.
What are some of the trends you're seeing in terms of growth areas in New Zealand/German business relations, particularly at the SME level?
As far as new opportunities for German SMEs in New Zealand go, it's definitely the building sector where we're seeing the most interest. Germany is an expert in energy efficiency and this is being translated rapidly into building products - and they're products New Zealand needs to embrace.
On another tack, I've been reading the articles on migrants and foreign investment with growing interest. There have been some substantial investments made by German companies into New Zealand over the past years - mostly under the radar - and there are many Germans migrating or wanting to migrate to New Zealand who have global experience, excellent training and money. Culturally New Zealanders and Germans are a good fit but Germans still find it pretty tough getting a start in New Zealand.
What difficulties do they encounter?
On a business level they find they're having to invest more in training staff and also educating consumers because they're often starting businesses in niche areas. Also, many of the people who come here will look for a job before setting up a business, but even though they have global experience they find it difficult to get a job without any prior experience in the New Zealand market.
What factors have you seen make German entrepreneurs successful when they do start businesses here?
There are some common factors. Generally they've been here on holiday - there are 78,000 German tourists coming here annually now - and while here they've realised New Zealand is more than just beautiful landscapes; they see some potential to explore a possible niche in the market. They're generally experts in their particular field in Germany and and have global experience in that market, and they're taking that knowledge into a niche market here in New Zealand.