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Country Commercial Guides
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CHAPTER V. LEADING SECTORS FOR U.S. EXPORTS AND INVESTMENT(All figures are $ millions; e = estimated)
1: Telecommunications Services - TES
2: Franchising - FRA
3: Computer Software - CSF
3: Computer Software - CSF
4: Drugs & Pharmaceuticals - DRG
5: Management Consulting - MGM
6: Computer & Peripheral Equipment - CPT
7: Electronic Components - ELC
8: Computer Services - CSV
9: Process Control Instrumentation - PCI
10: Scientific & Laboratory Instruments - LAB
11: Medical Equipment and Supplies - MED
12: Automotive Parts and Services - APS
13: Pollution Control Equipment - POL
14: Travel & Tourism - TRA
15: Telecommunications Equipment - TEL1: Telecommunications Services - TES The telecommunications services sector is one of the most promising business areas. This trend is supported by the liberalization of the telecommunications market, especially since the end of the voice telephony monopoly on January 1, 1998, and the expected growth in online and Internet applications and services. While the end of the fixed-line monopoly spurred competition in this segment, highest growth rates are expected for the mobile segment. Although traditional telecommunication services, such as call centers, may need German-speaking staff, there appears to be excellent potential for U.S. companies in nearly all areas - especially since the United States appears to be the only relevant supplier of many of these services. The quickly expanding use of the Internet as a virtual marketplace will trigger demand for Internet-related telecommunication services. It has to be noted, however, that the bulk of the revenues generated in the services area is still earned by Germany's telecommunication giant Deutsche Telekom AG.
1997 1998 1999(e) Total sales 34,400 36,700 38,500 Sales by local firms 33,400 35,200 36,500 Sales by local firms abroad n/a n/a n/a Sales by foreign-owned firms 1,000 1,500 2,000 Sales by U.S.-owned firms 700 1,000 1,5002: Franchising - FRA Approximately 5,000 new franchise outlets came into existence during 1998 and, by the end of 1999, an additional 6,000 franchisees are expected to be in operation. At the end of 1998, there were 625 franchise systems (1997: 598) represented by almost 33,000 franchisees. Compared to 1997, 4.5% more franchisors and 17.9 % more outlets reflect a healthy industry growth. A relatively high concentration of franchising chains in Germany can be found in the fast food sector (dominated by U.S. concepts), followed by home maintenance, clothing, automotive, recreation, education, cleaning, travel and hotels. At the end of 1998, 36 American franchisors (approximately 1,900 franchisees) held 11.8% of the German franchise market. In 1999, growth should be in the 5-10 percent range for both, the total franchise industry and the U.S. franchises. Franchise systems are at least equally as difficult to introduce in Germany as in the neighboring, non-English speaking EU countries. U.S. franchisors must be prepared to adapt to required market norms and standards, invest in market research, test market receptivity through pilot projects and adjust their concepts to German business practices and consumer tastes.
1997 1998 1999(e) Total sales 16,967 18,687 19,500 Sales by local firms 14,347 15,495 16,300 Sales by local firms abroad 247 266 300 Sales by foreign-owned firms 2,620 3,192 3,200 Sales by U.S.-owned firms 1,453 2,203 2,7003: Computer Software - CSF The software market is booming in Germany and the near-term outlook remains very positive, with anticipated growth rates in the eight percent range over the next few years. Innovative products will encourage the home and business user to upgrade or substitute existing software. The Internet is expected to penetrate the software environment further and act as a catalyst for sales of Internet-related software products. The ten top ten software suppliers hold roughly 30 percent of the total market, mainly with sales of standard software packages; more than 60 percent of sales are achieved by medium-sized and small software vendors. Most of this industry's new products are developed in the United States. Analysts estimate that 80 percent of software products sold in Germany is imported, mainly from the United States. There are no trade barriers to the marketing and sale of U.S.-origin software and innovative U.S. software products, in particular industry-specific and niche software will continue to find excellent sales opportunities in Germany. p
1997 1998 1999(e) Total market size 11,800 12,800 13,800 Total local production 3,900 4,200 4,400 Exports 1,400 1,500 1,600 Total imports 9,300 10,100 11,000 Imports from the U.S. 6,500 6,900 7,4004: Drugs & Pharmaceuticals - DRG In 1998, the United States were Germany's second largest supplier of pharmaceutical products, increasing exports to Germany by 43 percent over 1997 levels. German Government cost-containment legislation is still the driving force for sales of self-medication drugs and generic medicines. Best sales prospects continue to exist for pharmaceuticals affecting the central nervous system, cardio-vascular medication, analgesics, blood-building preparations, diagnostics, and infection/tumor blockers. In the OTC non-prescription segment, sports and health supplements, vitamins, analgesics, laxatives and influenza preparations/inhibitors continue in high demand. Access to the German pharmaceutical market is subject to strict national and European Union legislation. While prescription drugs still have to undergo lengthy approval procedures, market entry for biotechnically derived or technologically advanced drugs has been eased. The application procedure is now centralized through the European Drug Agency (EMEA) in London. p
1997 1998 1999(e) Total market size 14,900 15,500 16,700 Total local production 18,500 20,100 20,500 Exports 11,500 14,900 15,200 Total imports 7,900 9,100 10,800 Imports from the U.S. 1,000 1,430 1,7005: Management Consulting - MGM Management consulting continues to be one of the thriving service sectors in Germany. The market is growing by more than ten percent per year. At present, approximately 13,000 consulting companies operate in Germany, the majority of which is very small (less than 15 employees). On the other hand, the top 25 consulting firms account for twenty-five percent of the total turnover. Their per capita turnover is estimated at $250,000 per employee per year. Actual implementation of recommendations particularly in the information technology area becomes a more important professional factor. Further globalization through strategic alliances and JVs, and founding of subsidiaries and affiliates are other major trends in this sector.
1997 1998 1999(e) Total sales 9,370 10,444 11,800 Sales by local firms 4,685 5,222 5,900 Sales by local firms abroad n/a n/a n/a Sales by foreign-owned firms 4,685 5,222 5,900 Sales by U.S.-owned firms 4,000 4,300 4,6006: Computer & Peripheral Equipment - CPT Although competition from East Asia and Europe continues to increase, U.S. computer products are still viewed as innovative products of superior quality and leading edge technology. In 1998, sales of main-frame and mini-computers continued their downward trend, reflecting the continuing move away from these machines into PCS. Germany is, and will remain for the foreseeable future, a major opportunity for sales for American computer products. The United States is expected to retain its 1999 import share of approximately 26 percent at least until 2000. Exports exceed production due to considerable amounts of imported equipment being directly resold abroad or included as value-added equipment in locally manufactured products which are exported.
1997 1998 1999(e) Total market 19,900 21,400 22,900 Total local production 8,700 8,900 9,200 Exports 10,100 10,700 11,500 Total imports 21,300 23,200 25,200 Imports from the U.S. 5,500 6,200 6,4007: Electronic Components - ELC The German market growth of 10.3 percent for electronic components in 1998 significantly exceeded projections; the market reached a volume of DM 25.8 billion ($14.3 billion), while at the same time, the world market experienced a decrease. Semiconductors showed the highest growth rates with 15.8 percent. For 1999 an increase of 13 percent for this segment is projected. Electro-mechanical components increased by six percent, passive components by 2.5 percent and printed circuit boards by 2.8 percent. Future market expansion in Germany will be spurred by the data processing industry (+14 percent), automotive electronics (+11.9 percent), industrial electronics (+6.3 percent), and telecommunications (+5.8 percent). Leading U.S. electronics components manufacturers are represented in Germany. The United States account for almost 20 percent of all imports. Intelligent (smart) power and miniaturized chips have best market prospects.
1997 1998 1999(e) Total market size 13,000 14,300 15,700 Total local production 11,400 12,300 13,200 Exports 9,200 9,600 10,100 Total imports 10,800 11,600 12,600 Imports from the U.S. 2,100 2,300 2,4008: Computer Services - CSV The majority of large U.S. computer service providers have facilities in Germany and, for official statistical purposes, are counted as local firms. While hardware maintenance services decreased slightly by 1 percent from 1997 to 1998 and are expected to remain at current levels for 1999, software services grew by 9 percent from 1997 to 1998 and are anticipated to grow at that pace in 1999. Record growth is expected for outsourcing of customized enterprise solutions, installation and management. IT consulting and training are believed to perform well. Major growth factors among IT users are downsizing efforts through distributed computing and client/server solutions; outsourcing of specialist tasks such as web server operations and maintenance; implementation of MIS-Management Information Systems; and business reengineering and customer management support services. The quickly expanding use of the Internet as a virtual marketplace will trigger demand for Internet-related network services. With systems integration and shorter hardware/software update cycles, demand for training and consulting will retain its high levels.
1997 1998 1999(e) Total sales 7,600 8,300 9,000 Sales by local firms 5,700 6,200 6,600 Sales by local firms abroad 912 996 1,080 Sales by foreign-owned firms 1,200 1,300 1,440 Sales by U.S.-owned firms 760 913 9909: Process Control Instrumentation - PCI While the total PCI market in Germany continued to decrease, imports have increased substantially, in particular from the United States. The extraordinary growth rate reflects unusually large orders placed by German industry in the United States. Growth rates should reach about 5-6 percent. Instrumentation for testing, measuring and analyzing; sensors; software and control units for facility automation have best sales prospects.
1997 1998 1999(e) Total market size 5,412 5,112 5,200 Total local production 7,614 7,548 7,700 Exports 5,069 5,580 5,980 Total imports 2,867 3,144 3,480 Imports from the U.S. 738 908 97010: Scientific & Laboratory Instruments - LAB Cutbacks in government spending for LAB and a sluggish export business to South East Asia and South America characterized the German LAB industry in 1998. This negative trend could not be compensated by generally good sales to the chemical, pharmaceutical and life science industries. Overall, the market stagnated. Exports, which account for almost 50 percent of the production output, decreased. For 1999, the industry hopes that the market will recover at a low level. Depending on the future export business, the market could increase at about 5 percent. U.S. made instruments, which make up for an import market share of about 40 percent, enjoy a high receptivity in Germany. Chromatographic and spectroscopic technologies, laser and opto- electronics and laboratory automation technologies (LIMS) enjoy best sales potential.
1997 1998 1999(e) Total market size 3,381 3,411 3,600 Total local production 4,074 4,079 4,200 Exports 2,186 2,170 2,200 Total imports 1,493 1,502 1,600 Imports from the U.S. 560 610 66011: Medical Equipment and Supplies - MED The German market for medical equipment stagnated in 1998, at a total market value of $8.7 billion. Local demand is expected to increase only very slightly over the next twelve months as a result of the Government's health care reform 2000, approved in June 1999, which stipulates rigid cost-containment measures. With medical equipment expenses having increased tremendously over the past years, the public health care funds are now aiming at reducing their expenditures by capping each doctor's budget. Thus, hospitals and general practitioners are subject to cost-cutting pressures and may be less receptive to investing in high-quality advanced medical devices. Still, micro-surgery equipment and supplies, non-invasive and tele-medicine technology and automated equipment which assist in reducing labor costs, continue as good sales prospects. Medical consumables, preventive medical technology and home health care products will also continue to see good sales potential. While total imports into Germany in 1998 remained at 1997 levels, the positive trend for U.S. imports will continue throughout 1999 and into the year 2000. U.S. exporters should note that as of June 1998, all medical devices sold in Europe must conform to the MD Directive and display the CE mark.
1997 1998 1999(e) Total market size 8,700 8,700 8,800 Total local production 10,400 10,600 10,800 Exports 5,200 5,400 5,500 Total imports 3,500 3,500 3,500 Imports from the U.S. 700 750 80012: Automotive Parts and Services - APS The German market for automotive after-market products, especially for accessories and tuning products, decreased by 50% in 1998/99 compared to 1997 figures. Sales of workshop equipment also declined following a consolidation of German automobile dealerships and the longer servicing intervals for modern vehicles. In the workshop equipment sector, U.S. manufacturers continue to dominate the German import market. U.S. imports and sales of OEM equipment have risen as German manufacturers continue to increase automobile production. The overall picture for the export of U.S.-manufactured parts to Germany remains positive.
1997 1998 1999(e) Total market size 35,056 38,499 43,200 Total local production 27,611 30,888 35,200 Exports 4,833 5,277 5,700 Total imports 12,278 12,888 13,700 Imports from the United States 1,500 1,555 1,90013: Pollution Control Equipment - POL The Federal Republic of Germany's progressive approach to environmental legislation has fostered an innovative and globally competitive environmental technology industry. Since the beginning of the 1970's, governmental policy has required increasingly stringent standards of environmental responsibility from both private and public sectors. Early legislation concentrated on air pollution control and wastewater treatment, but waste management is becoming the focus of the 1990's. From 1991 to 2000 nearly USD 230 billion are expected to be invested into environmental protection measures not including investments into product integrated environmental protection. Although a large percentage of this investment will be concentrated on the modernization of technologies in Eastern Germany, development can also be expected in West Germany due to new regulations in waste management and recycling.
1997 1998 1999(e) Total Market 45,700 47,300 49,400 Local Production 46,700 48,500 50,500 Exports 9,300 9,700 10,100 Total Imports 8,300 8,500 9,000 Imports from the U.S. 820 870 92014: Travel & Tourism - TRA Germany's outbound travel market had a turnover in 1998 of USD 45,556 million; 28% was business travel and 72% was leisure travel. Germany represents the third largest overseas market to the U.S. (after Japan and Great Britain) and has grown 12% since 1992. Receipts from German visitors to the U.S.A. in 1997 were USD 4,142 million. 1,902,000 Germans visited the U.S. in 1998, a decrease of 4.6% vs. 1997 (1,994,000 visitors). The Office of Tourism Industries, USDOC, predicts an increase from Germany of 2.1% for 1999. Key trends in the travel preferences of Germans: special interest and soft adventure holidays, dual-purpose vacations, a lean towards eco-tourism, personal safety, greater individuality and flexible packages.
1997 1998(e) 1999(e) Total sales 44,444 45,600 46,100 Sales by local firms 39,899 40,800 41,300 Sales by local firms abroad n/a n/a n/a Sales by foreign-owned firms 4,545 4,800 4,800 Sales by U.S-owned firms 3,939 4,100 4,10015: Telecommunications Equipment - TEL The telecommunications industry is widely regarded as one of the driving forces behind future economic growth in Germany. Whether in the areas of multi-media, mobile communications, or the Internet, telecommunications is the key to unlocking German potential for future economic development. Germany is not only one of the fastest growing markets for mobile equipment, but is also very well prepared for any future technology in the telecommunications sector. Thousands of miles of high quality fiber optical cable make the country ready for the application of the future. The immense changes in the legal infrastructure and the privatization of voice telephony (January 1, 1998) have added momentum to the positive trend. The United States is Gemany's most important import source for telecommunications equipment.
1997 1998 1999(e) Total market 7,900 7,900 8,200 Total local production 9,200 9,200 10,300 Exports 5,800 5,800 6,300 Total imports 3,900 3,900 4,200 Imports from the U.S. 790 790 820Best Prospects for Agricultural Products (All figures are metric tons, unless otherwise stated.)
1: Tree Nuts
2: Pet Food
3: Wine
4: Rice
5: Edible Sunflower Seeds1: Tree Nuts - HTP The category of tree nuts includes pistacios, almonds, pecans, hazelnuts and walnuts. Germany does not produce significant quantities of these nuts, therefore supply is met virtually entirely by imports. Germany is the largest export market for U.S. almonds. A number of U.S. associations actively promote their products in Germany, including Blue Diamond Almond Growers, California Pistachio Commission and the California Walnut Commission. In 1998, U.S. total exports of tree nuts to Germany were valued at $233 million, out of a total import value of $673 million.
1997 1998 1999(e) MT MT MT A)Total market 149,000 140,000 145,000 B)Production * * * C)Total exports 21,000 26,000 25,000 D)Total imports 170,000 166,000 170,000 E)Imports from the U.S. 70,000 62,000 75,0002: Pet Food - G&FD Germany is one of the leading countries for pet ownership in the world. Even though the majority of pet foods is produced domestically (the market leader is a U.S. firm), interest in specialty, healthy foods for pets is growing rapidly. German pet owners are willing to pay premiums to properly feed their pets. Access to the German market for U.S. exports of pet food should be enhanced as a result of the recently completed US/EU veterinary equivalency negotiations. In 1998, U.S. total exports of pet food to Germany were valued at $35 million, out of a total import value of $401 million.
1997 1998 1999(e) MT MT MT A)Total market 716,000 691,000 740,000 B)Production 535,000 535,000 530,000 C)Total exports 259,000 242,000 240,000 D)Total imports 440,000 398,000 450,000 E)Imports from the U.S. 26,000 20,000 25,0003: Wine - HTP Germany is the world's largest importer of wine, with imports totaling 11.8 million hectoliters in 1998, valued at $1.9 billion. The import figure represents nearly two-thirds of total German wine consumption. Italy, France and Spain are the leading suppliers of wine to Germany, with a combined import market share of more than 80 percent. U.S. wines have developed an increasingly good reputation for quality in the German market. In the past five years the value of Germany's imports of U.S. wines has grown to $34 million in 1998.
1997 1998 1999(e) hl hl hl A)Total market 17,293 20,210 17,700 B)Production 8,299 10,655 8,600 C)Total exports 2,229 2,227 2,400 D)Total imports 11,223 11,782 11,500 E)Imports from the U.S. 64 102 1004: Rice - GFD Germany does not produce rice thus supply is met exclusively by imports. German rice millers have a long standing relationship with U.S. exporters of husked brown rice. Beginning 1998, U.S. rice exporters took advantage of a tariff rate quote at zero duty for 38,000 tons of semi-milled and wholly-milled rice. U.S. shipments for this value-added product went up by 10,000 tons replacing shipments of husked rice. U.S. shipments of rice to Germany are valued US$32 million in 1998. (Please note the units are metric tons.)
1997 1998 1999(e) A)Total market 226,000 215,000 225,000 B)Production * * * C)Total exports 42,000 40,000 40,000 D)Total imports 226,000 215,000 225,000 E)Imports from the U.S. 58,000 53,000 50,0005: Edible Sunflower Seeds for Confectionery Uses - COTS Germany is the largest market for U.S. exports of edible sunflower seed, accounting for almost 50 percent of total U.S. exports. While some German farmers continue to grow edible sunflower seed under contract, on the whole local farmers have not been pleased with crop yields. Marketing efforts on the part of the U.S. National Sunflower Association are expected to assist in the expansion of U.S. exports to this market. In 1998, U.S. total exports of confectionary sunflowers to Germany were valued at $39 million, out of a total import value of $59 million.
1997 1998 1999(e) MT MT MT A)Total market 101,000 76,661 121,000 B)Production 5,000 5,000 5,000 C)Total exports 8,000 3,873 4,000 D)Total imports 104,000 75,534 120,000 E)Imports from the U.S. 28,000 37,012 30,000
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[end of document] Note* International Copyright, United States Government, 1998 (or other year of first publication). All rights under foreign copyright laws are reserved. All portions of this publication are protected against any type or form of reproduction, communications to the public and the preparation of adaptations, arrangement and alterations outside the United States. U. S. copyright is not asserted under the U.S. Copyright Law, Title 17, United States Code.
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