Navigator 2020 Germany - Together we thrive - Presseportal
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Navigator 2020
Germany
Together we thriveContents 1. Overview
1. Overview Competitiveness and Current status of business Germany
Global
2. Business outlook customer focus help
Surviving day-to-day
3. Future strategy German businesses adapt
4. International trade to the new normal
5. Reshaping supply chains 10% 19%
6. Sustainability
Survey methodology German expectations of business growth
have waned in the wake of COVID-19. As Adapting to a changing environment
a result, companies are taking a more
cautious approach to future investing
than their global peers. However, the
proportion adapting to the new normal
mirrors the global figure, achieved
Introduction
through focusing on entrepreneurialism,
competitiveness and customer-centricity.
58% 58%
Looking ahead, intra-regional trade remains
dominant, with fewer German businesses
The German government’s response to anticipating an upswing in international
COVID-19 has been impressive, both in terms trading. Supply chains are a concern, with
of public health and fiscal support. The latest priority given to suppliers within home regions
fiscal package in June included VAT cuts to that can deliver fast, plus improved security,
boost spending and employment. Shortly cost reduction, and lower exposure to one
Thriving in the new normal
before our 2020 Navigator survey opened, single market.
it also extended its short-time working
scheme and relaxed its corporate insolvency Although generally seen as good for business,
law. But unemployment and corporate Germany’s engagement with sustainability is
bankruptcies could rise when these initiatives lower than globally. Pressure from consumers 32% 24%
end, hampering recovery in 2021. And as and governments, among other influences, is
everywhere, further waves of COVID-19 likely to increase the focus.
pose an ongoing threat.
Navigator 2020 Germany | 22. Business outlook
%
German business is less When businesses expect to return
optimistic about future to pre-COVID levels of profitability
growth than its global peers
65 %
Already ahead of our
pre-COVID levels End of 2020 to 2022 2023 to 2025
Consistent with global findings, Spain
optimism among German businesses has
declined. Only 15% feel more confident Russia
than a year ago – the lowest in Europe,
and half the global proportion. of businesses expect France
Expectations of revenue growth have also
to return to pre-COVID
Belgium
fallen by 20% compared with 15% globally. profitability levels by
What’s more, the proportion of German
the end of 2022 UK
companies that fall into the higher growth
category is below the global average. Greece
Encouragingly, more German businesses Germany
say they are thriving in the new normal than
globally. They’re also slightly ahead of the Italy
global average for when they might return
to pre-COVID levels of profitability. Netherlands
Of the strategies available to aid recovery, Top 3 drivers of business growth Ireland
enable growth and increase competitiveness,
German businesses intend focusing on
defensive cost-cutting, pro-actively expanding
1 2 3 Poland
Company Introduction Technology-
to new markets and improving products and
culture / of new driven Sweden
services. motivated products & efficiencies
workforce services
Switzerland
Navigator 2020 Germany | 32. Business outlook (continued)
%
How business outlook has changed
CHANGE IN BUSINESS OUTLOOK VS PAST 12 MONTHS [Q15]
Germany
Business investment
in the last 12 months*
German companies are more conservative
59%
More pessimistic More optimistic or
about investing than their peers: six in
expect to stay the same ten (59%) intend increasing investment,
compared with two-thirds globally and
22 2019 77
Germany
in Europe (67% and 64%). They are also
34 2020 65 cautious about the level: a third (34%)
plan to increase investment by 10% or
more, compared with half globally.
20 2019 80
APAC
32 2020 68 These businesses will focus investment on of German businesses
product innovation, the customer experience,
employee wellbeing, expansion into new
intend to increase
20 2019 79
Europe markets and marketing. But in each case investment in their
36 2020 62
the proportion is lower than globally.
business in the
12 2019 88 Four in five companies plan to increase next year, despite
North
America 26 2020 73
investment in technologies that facilitate product/ the challenging
service innovation, automation/operational
efficiency, and targeting new customers. environment
13 2019 86
South
America 18 2020 80
Strategies of German businesses to benefit
MENAT
15 2019 85
from growth drivers and address threats
22 2020 77
1 2 3 4 5
Rest of
18 2019 82 Cutting costs Expanding Improving Investing in Collaborating
Africa into new the quality of new skills / more with
32 2020 67
markets the products / employee industry partners
services wellbeing / peers
*Excludes businesses answering 'Don't know'
Navigator 2020 Germany | 43. Future strategy
%
For German businesses, Investment priorities enabling
entrepreneurialism businesses to move forward
and innovation are key
to future success
85 84 81 81 80 79 77 75 74 72 72 68 63
More companies in Germany have
84
implemented changes over the last 12
%
months than globally, with a higher
proportion of long-term/transformational
changes – particularly among corporate,
international and offline businesses. In
line with the global position, the key
reasons were cost reduction, advances
in digitisation, future uncertainty, and
regulatory requirements. of businesses have
Product innovation
Process innovation
Upskilling workforce
Employee wellbeing
Customer
experience
Sales channels
New markets
Marketing
Cashflow
Supply chain
transformation
Cyber security
Sustainability
Digital-only
tools
undergone changes
German businesses believe the successful
companies of the future will be well-rounded
in the last 12 months
and defined by innovation. More than half
(55%) say that becoming more entrepreneurial
will make their business more customer-
centric. Half say it will make them more
competitive, and just under half (45%) say Top 5 facets of a successful entrepreneurial business
it will improve their people focus.
There are clear and tangible benefits to
1 2 3 4 5
Technical Agility / Open- Recognising Speed
becoming more entrepreneurial: three in ten innovation capacity for mindedness / the vailue to market
businesses in Germany believe it will lead to change inclusivity of failure
an increase in market share, in line with global.
Navigator 2020 Germany | 54. International trade
A less optimistic outlook Priorities for expansion in the next 3-5 years
prompts Germany to
Markets, territories and regions in which German businesses are looking to expand
maintain focus on
intra-regional trade
63 % Markets & territories Regions
Fewer German companies think
international trade has or will become
more difficult than their global peers.
This reflects the lower proportion (40% of companies expect
compared with 64% globally) who
believe protectionism has increased.
their international trade
prospects over the next
Despite this, fewer businesses expect their
1-2 years to be positive
international trade prospects over the next
couple of years to be positive (63% compared
with 72% globally). But sentiment appears to
be improving, with more German companies
not reducing external trade in the past two Protectionism
years, as well as not considering doing so in
the next two years, than in 2019. Percentage of businesses that think
that countries/territories/governments
Intra-regional trade remains dominant in are becoming more protective of their
Germany – seven in ten businesses trade
within Europe, with Austria and France the
domestic businesses
10% 11%
50
most important markets. And slightly more
US
5% 19% APAC
German companies (15%) are opting to
operate domestically only than in 2019 (11%), 40 (9% in 2019) 11% 42% (14% in 2019)
Central Austria
instead of expanding internationally.
30 and South (18% in 2019)
France Europe
America
2017 2018 2019 2020 (8% in 2019) (48% in 2019)
(9% in 2019)
Navigator 2020 Germany | 65. Reshaping supply chains
Supply-chain anxiety
%
Priorities for the supply chain
motivates companies to (Priorities immediately in 2021 and beyond)
reassess selection criteria
44% 70 69 68
65
62 61 61 60 60
Nearly nine in ten German companies
(89%) have concerns about their supply
58
chains, chiefly around increasing costs, 51
instability and insufficient agility.
of businesses expect
In response, they are selecting suppliers
according to their operational resilience and that reshaping their
ability to deliver quickly, as well as their use supply chain will
of digital/technology. Businesses have also
focused on suppliers located within their
reduce costs
home regions.
Of the companies that have made changes,
slightly more have reduced their supply chain
(20%) than have diversified it (17%) – the
reverse of the global trend.
Use of digital/technology
Resilient/able to deliver quickly
Suppliers closer to customers
Tighter specifications/contracts
Future pandemic control
Suppliers’ sustainability practices
Greater transparency
Focus on home region
Work with more suppliers
Transport/storage management
Work with fewer suppliers
Looking ahead to 2021, businesses will invest Top 3 benefits of reshaping
in areas of the supply chain that reflect the the supply chain
changes they’ve been making. They expect
these priority areas to reduce costs, as well
as minimise exposure to one single market,
1 2 3
Cost Reduction Enhancement
while also improving security. reduction of exposure of security/
to one reduction of risk
market to supply chain
Navigator 2020 Germany | 76. Sustainability
Greater focus on Companies believe a greater focus
sustainability is expected to on sustainability will drive growth
benefit German business
50% expect modest growth
of up to 5%
German companies recognise that
sustainability is good for business,
19% expect growth of
between 6% and 9%
86
although less so than their global
%
peers. And while nearly three-quarters
4%
(73%) expect an increased focus on expect growth of
sustainability to result in sales growth, 10% or more
this is also a lower proportion than their
global counterparts (86%).
Approximately three-fifths of German
companies have set targets for a broad range of German companies
of environmental, social and governance- think there are multiple Measuring sustainability
related (ESG) elements. Again, though, this
is a lot lower than the global proportion,
opportunities for their More companies in Germany have been measuring all 3 aspects compared with 2019
which stands at around three-quarters. business from improving
The metrics that have seen the biggest
its environmental and
increases since 2019 include energy usage ethical sustainability
(almost twice the level of a year ago), labour
2019 65% 55% 34%
standards, and executive salaries and
compensation. 40%
2020 76% 70%
Over the year to come, businesses believe
that consumers, governments and supply
chains are the most likely to ramp up
pressure to be sustainable. Environmental Social Governance
Navigator 2020 Germany | 8About HSBC Navigator Germany For further information about
The HSBC Navigator survey, which is the the research please contact:
largest of its kind, is conducted on behalf of
HSBC by Kantar. The study gauges sentiment Kate Woodyatt
and expectations of businesses in the near to HSBC Global Communications
mid-term future on topics including: business katewoodyatt@hsbc.com
outlook, future strategy, international trade,
supply chains and sustainability. It is compiled Or click on
from responses by decision-makers at 10,368 www.business.hsbc.com/navigator
businesses – from small and mid-market to
large corporations – across a broad range of Note
industry sectors in 39 markets. There may be a slight discrepancy between
the sum of individual items and the total as
Sample sizes for each market were chosen shown in the tables due to rounding.
to ensure the statistical accuracy of results,
with 350 businesses surveyed in Germany. Whilst every effort has been made in the
Global results are based on an average of the preparation of this report to ensure accuracy
39 markets (using weights based on each of the statistical and other content, the
market’s share of world trade). The survey was publishers and data suppliers cannot accept
conducted between 11th September and 7th liability in respect of errors or omissions or
October 2020. Interviewees were polled on a for any losses or consequential losses arising
range of questions including how COVID-19 from such errors or omissions. The information
has affected their business and potential provided in this report is not intended as
for growth. The survey represents a timely investment advice and investors should
source of information on the fast-evolving seek professional advice before making any
international business environment. investment decisions.
.
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