US corporations still value Germany as a business location but are planning fewer investments in the country. This is the finding of our latest survey of 100 CFOs of the largest German subsidiaries of US companies.
Fundamental location factors are rated very positively
In particular, US investors see public safety (83%), political stability and the high standard of living (both 81%) as very positive factors for Germany as a location. They also appreciate Germany’s high labor productivity. Overall, at least 40% of the respondents put Germany among the top five EU countries in 10 of the 16 location factors investigated by the survey.
From US investors’ perspective, the availability of qualified skilled workers in the country has significantly improved: 37% see Germany as one of the top five in the EU in this factor, compared with 26% in the survey from two years ago.
Germany retains its good rating as a research location, with 50% counting Germany among the five best research locations in the EU. However, this figure was much higher in our survey from two years ago at 61%.
Managing Partner International Business
KPMG AG Wirtschaftsprüfungsgesellschaft
Digital infrastructure grades poorly
Weaknesses cited in the previous survey two years ago continue at their problematic level (tax system, logistics infrastructure). Respondents were clearly critical of Germany’s digital infrastructure, with 36% rating it the worst or one of the five worst in the EU. Only 13% said that the digital infrastructure was of progressively convincing quality.
Moreover, while Germany is still seen as one of the European leaders in numerous location factors crucial for future value creation, it has suffered a substantial drop in esteem in the ‘process automation’ and ‘innovative environment’ factors, for example.
As a result, US companies are significantly reducing their investments in Germany. Only 18% of US investors want to invest at least ten million euros a year in Germany in the next five years. This figure was 24% in the 2019 survey and as high as 47% four years ago.
“US corporations want to invest significantly less in Germany. This is a surprise, because the current megatrends such as digitalization and environmental protection offer great growth potential. It is these areas in particular where innovations ‘made in Germany’ promise success.”
US corporations are in a good position in Germany, and this is likely to remain the case for the foreseeable future: Currently, 73% of German subsidiaries of US companies describe their economic situation in Germany at least as good. 30% even describe it as very good. The outlook also attests to great optimism: 59% of the CFOs surveyed expect further improvement in 2022. On the basis of a five-year outlook, this figure increases to 72% – a clear signal of the long-term engagement of US corporations in Germany.
About the survey
The findings in “US Business in Germany 2022” are based on 100 interviews with CFOs of the largest German subsidiaries of US corporations. They are part of the total of 360 interviews conducted on our behalf by the opinion research agency KANTAR between mid-June and mid-August 2021 with CFOs of the largest German subsidiaries of international corporations from the most important investor countries.
We have published in the overall findings in the survey “Business Destination Germany 2022”. US corporations are the most strongly represented in the survey, as the US is in first place when it comes to direct investments in Germany. This is why we have summarized the findings of the interviews with US investors separately.