How Do Small German Companies Conquer The World?

In today's world

Recently, the economist published an introduction to the internationalization of German enterprises.

Enlightenment from small German Enterprises: Minority Leaders

Generally speaking, small and medium enterprises are at a disadvantage in the process of internationalization, because they do not have the strong resources and visibility of large enterprises, and small and medium-sized enterprises are often satisfied with their domestic needs.

Therefore, internationalization is almost regarded as a specific term for large conglomerates.

But Germany's small and medium-sized enterprises are completely different.

First, they are ambitious and have been expanding into the international market.

Second, although they also have the general limitations of small and medium enterprises, they are quite successful in the process of internationalization, which can be a model for small and medium-sized enterprises all over the world.

So, what is the secret of success in the process of internationalization of small and medium-sized enterprises in Germany? In fact, it is very simple to talk about.

First of all, 90% of the small and medium enterprises in Germany operate in the B2B rather than B2C.

Compared with the B2C market, there are several advantages in the operation of the B2B Market: first, the B2B market has a relatively low level of competition.

This makes the small and medium-sized enterprises in Germany less competitive pressure on the international market, and thus easier to win.

Second, the changes and turbulence in the B2B market are smaller and easier to deal with.

Third, the core of success in the B2B market is often the rational indicators of product quality and performance, rather than irrational indicators such as advertising brand and promotion, so the performance of enterprises in the market is relatively easy to grasp.

In addition, sales in the B2B market often rely on word of mouth and long-term cooperation, and do not require a lot of advertising and brand input.

Therefore, from the overall positioning of enterprises, Germany's small and medium-sized enterprises have gained the advantage in the process of internationalization.

Second, Germany's small and medium enterprises focus on the niche market rather than the mainstream market in B2B.

Moreover, they generally choose the niche market in the mechanical engineering field with relatively high barriers to entry, which is also a traditional advantage of German enterprises.

Access to these niche markets generally requires more complex technology and production capacity.

Therefore, these niche markets are hard to penetrate into the high-tech products such as software, network products and so on, but it is easier to market protection once they are introduced into the market.

For example, Germany's Rational specializes in the oven used for professional kitchens, Hako produces cleaning and cleaning equipment, and Tente specializes in producing various pulleys for hospital beds.

These German principles of operation do not dance in the territory of elephants (avoid direct competition with international conglomerates).

Therefore, the small and medium-sized enterprises in Germany are facing smaller competition pressure when they are internationalized, and their products have traditional advantages.

Moreover, Germany's small and medium enterprises attach great importance to product and technological innovation.

They have reformed the traditional business philosophy and mode of mechanical enterprises, taking product services rather than product sales as the core source of revenue.

For example, Hako, which specializes in cleaning equipment, has more than 80% of its revenue from services.

This pformation from mechanical manufacturing to service has led to the establishment of a long-term, stable and interdependent symbiotic relationship between these German enterprises and users, and laid a solid foundation for their success in internationalization.

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With the support of these factors, the achievement of internationalization of German SMEs is remarkable.

They are quite rapidly leading the niche market of many B2B in the world.

For example, Koenig & Bauer is the global leader of printing and dyeing compressors, RUD is the global leader of industrial chain, and Karcher is the global leader of high pressure professional vacuum cleaner.

These three core business concepts constitute the Mittel Management of the success of German SMEs.

Innovation oriented

Of course, the cultural characteristics of German enterprises have contributed to their global success.

German culture is pragmatic, rigorous and long-term.

70% of Germany's small and medium-sized enterprises are located in non urban areas or villages.

Therefore, their corporate culture is more practical and understated.

And this culture is actually the most lacking of Chinese enterprises.

So what can our Chinese enterprises, especially small and medium-sized enterprises, learn from the German international experience?

First, focus on the global niche market.

Chinese enterprises should not just focus on the popular mass market that is easy to be noticed by the media, but should combine their advantages to find and penetrate small market or even non popular market in the B2B or B2C market in the international market.

The accumulation of small market in every country can form a global market segment with great market potential.

The more successful Chinese companies in the implementation of this concept are Wanxiang, the world's largest manufacturer of automotive Vientiane wheels, BYD (BYD), the world's second largest rechargeable battery manufacturer, and CIMC, which controls 55% of the global low end container market share and Shanghai Zhenhua Port (ZPMC), occupying 54% of the market share of the global port crane.

In view of this, the internationalization of Chinese enterprises does not necessarily follow the fashionable Silicon Valley mode, nor does it need to take the overseas expansion strategy of American conglomerates. Instead, it needs to play its traditional advantages from B2C, especially the niche market of B2B.

Second, guided by product and service as the core.

At this stage, the products of Chinese enterprises are still inferior to those of the European and American counterparts in terms of core performance, so they often compete on the basis of price advantage in the international market.

But the competitiveness of products based on price advantage is very difficult to sustain.

Chinese enterprises should learn from German enterprises and increase their service components through various reasonable ways, so that they can not only make up for the deficiency of their products in core performance, but also help establish a more stable and long-term user relationship.

That is to say, Chinese enterprises should learn to serve the products and software to enhance the comprehensive competitiveness of the products.

This requires Chinese enterprises, especially processing enterprises, to change the backward product centered management mode and pform them into a modern business model with service and software as the core.

In fact, soft core and hard supplement are the core characteristics of modern enterprises.

The success of IBM and the failure of NOKIA in recent years are the best interpretation of the rationality of modern business models.

IBM, which was once on the verge of collapse in the 80s of the last century, successfully carried out the fundamental pformation from hard to soft, from product to service, and directly laid its leading position in the world today. NOKIA, which lost its leading position in the global mobile phone market, failed to understand the importance of this hard and soft pformation, and overemphasized the hardware part of the product.

Third, do our best to achieve the best.

Although this is a cliche, it should be emphasized constantly.

In addition, German experience shows that internationalization is not only a patent for large enterprises, but also can occupy the whole world as long as they have excellent products.

Chinese enterprises need not be bigger but stronger.

At the same time, Chinese enterprises should learn from German enterprises' steady and steadfast management style, stop impetuous and eager for quick success and instant benefits.

In this way, even if Chinese enterprises do not yet have the elements of a successful internationalization of a company in the traditional sense, such as product advantage, brand advantage, channel advantage, capital advantage and market information superiority, it can still be successful. The way of internationalization of German small and medium enterprises has fully proved this point.