Why is German manufacturing so strong?

In the global economic development, different from other western countries, Germany has successfully maintained a high salary income and saved labor force by continuously upgrading the industrial value chain, and at the same time, Germany's manufacturing industry has always maintained a strong development momentum. So what makes German manufacturing so successful?

One of the success factors: government participation in industrial R & D

German made products and processing process are very delicate and pay attention to innovation. A large number of high-tech means and innovative content are added to each process. The German government has played a key role in stimulating innovation and providing infrastructure support.

Unlike most countries, Germany's government support does not come from the central macro planning, but from the decentralized grass-roots government. The purpose of the support is not to select individual leaders or determine the R & D direction directly, but to provide financial support and infrastructure support for enterprises, and ensure that small and medium-sized enterprises and suppliers can also participate in it.

In addition to the common tax incentives, universities and basic research support, Germany has a unique infrastructure for innovation, which is the science and technology center network that is committed to working closely with the industry. It enables close interaction among enterprises, customers, suppliers and public education research institutions, and brings stable and intensive innovation results. It helps German industry improve its production efficiency and competitiveness, and its position in the industrial value chain continues to rise.

The second success factor: supporting small and medium enterprises

Although the most well-known German brands such as BMW and Volkswagen are large multinational enterprises, more successful German companies with more creativity and high internationalization are small and medium-sized enterprises. These small and medium-sized enterprises form the main part of the German economy and create most of the employment.

Among these small and medium-sized enterprises, there are hundreds of companies which are unknown to most people, but they are the world's leading industry leaders. 90% of their products are imported into the global market and are known as "invisible champions".

The German government has always ensured the equal development of large enterprises and small and medium-sized enterprises in policy-making. All economic and tax policies will take into account the special interests of small and medium-sized enterprises. In law and administration, small and medium-sized enterprises can also be treated equally. Public research projects and government procurement will also bring SMEs into the scope of cooperation.

The third factor of success: cultivating local industrial clusters and industrial networks

All kinds of industrial clusters are one of the major characteristics of German industrial structure. This kind of industrial cluster is far more meaningful than the pure regional industrial concentration. Industrial clusters contain dense and complex industrial cooperation networks in which companies establish industry standards and conduct basic research together with suppliers and customers, local research centers, universities, vocational schools and even competitors.

Most of these industrial clusters are highly specialized after decades of independent development. One example is the watch and clock manufacturers in the black forest area, which have developed into specialized production clusters for precision surgical instruments, and their products are exported to the world.

The government will not try to create such a new industrial cluster from top to bottom. It's about looking for companies and research institutions that have already set foot in certain fields and providing them with the financial support they need, as well as possible equipment and personnel support, to help them continue to grow. Hans yogbulinger, former president of the Fraunhofer Association, said: "our philosophy is to find an industrial cluster that has already sprouted, water it and help it grow.".

Success factor 4: training skilled workers

Germany's vocational training system is of great help to the development of German industry. It not only supplies skilled labor to various industries, but also helps Germany win the crown of the lowest unemployment rate in developed economies.

No matter where the graduates come from in Germany, personnel managers can accurately know the production skills they have mastered, and these skills are often directly related to the company's business, which is quite practical.

Due to the participation of enterprises in this kind of vocational training, graduates have already established a sense of corporate identity in the early stage of training, which is very helpful for the company to improve employee loyalty. It also indirectly improves the innovation capability of German companies, because innovation comes not only from the brains of engineers with university degrees, but also from the first-line production line.