Why Germany is the Export-Weltmeister?

Germany is called the ‘Export-weltmeister‘ which is translated as the world champion in exporting. And it does make a lot of sense. Germany is, after all, one of the few developed nations that enjoys a massive trade surplus.

Between 2000 and 2013, Germany’s exports increased by a massive 154 percent, handily beating competitors such as the UK, where exports grew by 98 percent and France where they grew by just 72 percent. Not many remember that back in 2000, Germany was referred to as the “Sick man of Europe”.

Export-Weltmeister in numbers

Germany exported goods to the value of 1,195.8 billion euros and imported goods to the value of 948.0 billion euros in 2015. Based on provisional data, the Federal Statistical Office (Destatis) also reports that German exports increased by 6,4% and imports by 4,2% in 2015 compared with 2014. In 2015, export and import levels were higher than the previous all-time highs recorded in 2014.

That year, Germany exported goods to the value of 1,123.7 billion euros and imported goods to the value of 910.1 billion euros. The foreign trade balance showed a surplus of 247.8 billion euros in 2015, which was the highest value ever recorded. It clearly exceeded the previous year’s peak of 213.6 billion euros. In 2013, the surplus of the foreign trade balance had been 197.6 billion euros. EU-28 international trade in goods with the rest of the world (the sum of extra-EU exports and imports) was valued at EUR 3 517 billion in 2015.

Both imports and exports increased in comparison with 2014, but this increase was larger for exports (EUR 88 billion) than for imports (EUR 35 billion). As a result, the EU-28’s trade surplus increased from EUR 11 billion in 2014 to EUR 64 billion in 2015. After experiencing a sharp fall in both exports and imports in 2009, the EU-28 saw its exports rise 58.7 % over four years to a record level of EUR 1 737 billion in 2013. Exports then fell 1.9 % in 2014 before rising 5.1 % to a new peak in 2015 of EUR 1 791 billion.

By contrast, the increase in imports after 2009 was 45.5 % over three years to peak in 2012 at EUR 1 798 billion. Imports fell 6.2 % in 2013 before stabilising (up 0.3 %) in 2014 and increasing by 2.0 % in 2015, still below the value reached in 2012. Germany was by far the largest Member State in relation to extra EU-28 trade in 2015, contributing 28.2 % of the EU-28’s exports of goods to non-member countries and accounting for almost one fifth (18.8 %) of the EU-28’s imports.

The next three largest exporters, the United Kingdom (12.9 %), France (10.5 %) and Italy (10.4 %), remained the same as in 2014 (although France’s extra-EU-28 exports surpassed those of Italy), and were the only other EU Member States to account for a double-digit share of EU-28 exports. The United Kingdom (15.2 %), the Netherlands (14.4 %), France (9.5 %) and Italy (8.9 %) followed Germany as the largest importers of goods from non-member countries in 2015.

The relatively high share for the Netherlands can, at least in part, be explained by the considerable amount of goods that flow into the EU through Rotterdam, which is the EU’s leading sea port. The largest extra EU-28 trade surplus in goods, valued at EUR 179.4 billion in 2015, was recorded by Germany, followed by Italy (EUR 33.7 billion) and Ireland (EUR 29.3 billion).

Today, Germany is without doubt the powerhouse of Europe, by far the most significant European nation. In fact, it is Germany that has kept the Euro afloat when much of Europe has fallen into a crisis – Spain Portugal and in particular, Greece.

So what’s the secret of Germany’s incredible success as an exporter? Why is Germany the Export Superpower of the World? And what can the rest of the world learn from Germany? Let’s find out!

The Power of the Euro

Paradoxically, it is the weakness of the Euro that powers Germany. Why is that? Since the Euro has been considerably weakened because of the sluggish economic performance of countries in southern Europe, German exports are cheaper than they would have been, had Germany had a currency of its own, such as the old Deutschmark. So, Germany runs a huge trade surplus at the expense of the rest of Europe. Clever!

Low Levels of Debt

Germans hate taking debt. Perhaps there are historical reasons for this. Following the end of the World War 1, Germany was saddled by an insurmountable national debt, which was one of the principle reasons that led to the rise of Adolf Hitler and the Nazi rule.

As one German expert says, “In German, borrowing is ‘schulden’, [the same word for] guilt. There is an attitude that if you have to borrow, there is something wrong with you.” That’s why Germans, as a people are averse to debt and avoid it when they can. In this, Germany is so unlike the rest of Europe, where debt is a part of life. No wonder then that Germany is in such a better financial position relative to its neighbors in Europe.

Aggressive Labor reforms

Everybody knows that German workers are the most productive in the developed world. What one may not know is that German workers also work the least hours in the developed world, after France! This should come as a shock to many, but it shouldn’t. German workers do more work in less time.

There are no labor problems in Germany as the unions and corporations speak the same language. The labor market in Germany is stable and flexible and unaffected by global economic downturns. Germany has one of the highest employment figures in the world. German workers are loyal to employers and in return, employers acknowledge and reward the efforts of the workers at every opportunity. If there is one country where capitalism can be said to have a soul, it is in Germany.

An Education System that Works

The great thing about German education is the stress laid on vocational training. As an education expert based in Germany Mr. Woergoetter says, “Half of all youngsters in upper secondary school are in vocational training, and half of these are in apprenticeships.”

Students in Germany spend more time on vocational training than in any other country, usually spending 3 to 4 years on on-the-job training and when they come out of it, they are almost guaranteed a job. There is no stigma whatsoever attached to vocational training or technical colleges in Germany, unlike in many countries such as India or the UK.

As Mr Woergoetter says, technical jobs in Germany are “not considered a dead end. In some countries, company management come from those who attended business school, but in Germany, if you’re ambitious and talented, you can make it to the top of even the very biggest companies.”

The German education system creates a highly skilled workforce, with superior problem solving skills, capable of handling any situation that may emerge in the workplace. Surely, there is so much that other nations can learn from Germany.