“German companies create jobs abroad that offer future prospects"

Dr. Volker Treier, Head of Foreign Trade at the DIHK, on current global economic challenges

German companies have invested around 250 billion dollars just in the USA. Even if the proportion that has flowed into the finance sector is very large, German companies have created 840,000 jobs by directly investing in manufacturing in the USA – Dr. Volker Treier

Germany’s worldwide network of Chambers of Foreign Trade is growing: 142 locations in 92 countries and nearly 50,000 member companies worldwide. Alone 55 of these countries will be represented at HANNOVER MESSE. A conversation with Dr Volker Treier, Deputy Chief Executive of DIHK International – the AHK network – about current export economy trends.

Germany’s exporters keep on setting new records, but there are dark clouds on the trade policy horizon. What is the mood among companies doing business abroad?

Germany’s foreign trade success does not grow on trees. What it does demonstrate is that a strongly industry-focused growth model works and that German exporters have been able to play their role in the global economic recovery of the last two years. Nonetheless, tariff barriers for the trade have been on the increase for some time now and tariff restrictions are now being discussed too.

There are critics of Germany’s trade surplus not just in the USA…

It is important to recall a few facts in the discussions with our partners. We only have a substantial trade surplus with the USA, France and the UK. In the case of the USA, a strongly consumption-oriented national economy, that surplus amounts to around 50 billion dollars, which you need to put into perspective when compared to the 350 billion dollar surplus that China runs.

Here, German exports of capital to the USA have not yet been factored in…

No, German companies have invested around 250 billion dollars just in the USA. Even if the proportion that has flowed into the finance sector is very large, German companies have created 840,000 jobs by directly investing in manufacturing in the USA. If you also consider the investment in vocational training and education, that represents a not insubstantial contribution to sustainable employment in the US manufacturing industry.

Don’t people over there acknowledge this contribution?

Many of our contacts in the USA are very aware of this correlation. This HANNOVER MESSE (2018) in particular will also show that a very large number of countries around the world are interested in attracting investment from the German manufacturing industry. Let’s take this year’s Partner Country, Mexico, which has transformed from a developing country into an industrialised nation in a short space of time, as an example. By directly investing 12 billion dollars, German companies have meanwhile created 220,000 jobs there. Global value chains have been created, which require stability and along which any form of fragility or weakness needs to be avoided.

A very large number of countries around the world are interested in attracting investment from the German manufacturing industry. Let’s take (…) Mexico, which has transformed from a developing country into an industrialised nation in a short space of time, as an example. By directly investing 12 billion dollars, German companies have meanwhile created 220,000 jobs there

Cue the term Brexit: What perspectives do you see here for exporters?

Unfortunately, I fear that we still have the worst ahead of us. The UK has slipped from third to fifth on the list of Germany’s most important trading partners since 2016, when UK customers’ purchasing power against the Euro decreased in the wake of the referendum result. Of course, the free trade agreement that is being sought is also a burden on companies. Nearly every twelfth German company that has invested in the UK is considering shifting production elsewhere in order to minimise the imminent damage.

This then raises the question of which new markets could offset these negative regional changes.

There are diverse opportunities right around the world and we are also encouraging German companies here in Hanover to seize these opportunities. Top of the list are Asia’s economic integration and the CPTPP, where trans-Pacific trade barriers are set to fall, even without the involvement of the USA. This is a positive sign, too, that things can be done differently. The EU is also in positive discussions with Mercosur, which wants to cement its role in global value chains. And finally Africa represents an entire continent of untapped markets.

There are diverse opportunities right around the world and we are also encouraging German companies here in Hanover to seize these opportunities. Top of the list are Asia’s economic integration and the CPTPP, where trans-Pacific trade barriers are set to fall – even without the involvement of the USA

Are medium-sized businesses able to cope with the geographical breadth that internationalisation brings?

Companies that don’t have entire teams of economists only get one shot at tackling a new market, so to speak. One of the most important tasks that we as the global Chamber Organisation set ourselves is, therefore, not just flagging opportunities, but also identifying, labelling and minimising the risks in foreign markets. The organisation is growing in sync with the German export economy, but also needs to anticipate developments. You can see the facts that we are doing so in the most recently established AHK locations in Tanzania, Sri Lanka and Cuba – as well as in San Francisco, the global digitalisation hub.

How important is HANNOVER MESSE to you?

Here, we are seeking the dialogue with companies and get them involved in networks abroad. That’s why we have a record number of chambers representing us at the fair, are creating our own events, bringing in business delegations from all over the world and also providing personal advice to companies. This trade fair has become a must-do event for the DIHK and the Chambers of Foreign Trade.

Dr. Volker Treier is Deputy Chief Executive of DIHK (translation to English: German Chamber of Commerce and Industry)